Retail investors intuit that much goes on at the operational level of companies that one does not wish to see streamed in HD 1080, any more than one wants to see gall bladder operations on YouTube, even though we know that these bloody operations happen, are glad that they happen, and delight that they usually succeed. Similarly, well-run cyclical companies often find themselves reporting poor earnings, issuing debt, and cutting dividends when the price of commodities are low. We all know that this is a characteristic of the company’s story, but our ability to receive real-time updates and see the difficulty up close may cause enough to encourage some people to sell their stock.
In the past, there have been two ways that would give investors the ability to hold through cyclical downturns.
The first is genuine naivete: For most of the 1900s, people tended to believe the best about … Read the rest of this article!