dcollon Posted February 24, 2016 Share Posted February 24, 2016 Another great post by Fundoo Professor https://fundooprofessor.wordpress.com/2016/02/24/risk-seeking/ Link to comment Share on other sites More sharing options...
oddballstocks Posted February 24, 2016 Share Posted February 24, 2016 Good points. I wish he would have discussed operating leverage, in many cases it can be much worse than financial leverage. But operational leverage isn't on the balance sheet so a lot of investors miss it. Some of the best investments are companies that have high operational leverage and are at the bottom of the trough before revenue ticks above the roll-over threshold. Suddenly earnings explode out of nowhere. Likewise the worst investments are ones with high operational leverage with falling revenue. Investors believe the decline path will be steady and smooth when the reality is it's steady then falls off a cliff. Link to comment Share on other sites More sharing options...
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