One of the overarching principles I derived from my research and my 50-plus years of investing experience is in the markets and in life, to be successful one should bet on the upside that comes from a) evolution that leads to productivity improvements, but not so aggressively that b) cycles and bumps along the way knock you out of the game. In other words, betting on things being better—e.g., real earnings being greater—is pretty much a sure bet. But betting too much on that so that a bump along the way can ruin you is bad. That’s why having quality indicators helps a lot.
