When one identifies the proper characteristics for a superperformance candidate, the risks become unambiguous. If a stock doesn’t act as expected, that’s a major red flag. After all, the stock has already met very elite criteria and has been deemed a strong prospect. If such a stock behaves poorly, that suggests a problem. Learning what to expect allows you to detect when a stock is acting correctly or incorrectly in the prevailing conditions. Because you know how something is supposed to perform, when it doesn’t perform that way, it makes the exit decision much easier.
