What are your Investment Rules?

[kiora]

"Do higher risk investments earn higher returns?

We compared the performance of three types of high-risk businesses to all the other companies:

Unprofitable companies
Companies with high levels of debt
Companies based in emerging markets

While the rare success stories captivate the attention of investors and the media, our study shows that unprofitable companies rarely live up to the promise.

In every one of the last 20 years, the loss-making companies in our study delivered a lower investment return than the profitable ones. Investing in a portfolio of loss-making companies over this period would have left you with just 5% of your starting capital. If you only invested in profitable businesses you would have generated a return of 243%.

We consider companies with Net Debt to EBITDA of over 3x to be highly indebted. Over the last 20 years a portfolio of these companies would have returned returned just 2% p.a. compared to 7.5% p.a. from those with better balance sheets.

Our data shows that investors haven’t been adequately rewarded for these risks. The emerging market companies in our study underperformed those in developed markets in 15 of the last 20 years. Over that period emerging market companies have returned on just 1.9% p.a. in AUD versus 6.7% p.a. for developed market companies."
https://www.livewiremarkets.com/wire...QUALITY%20WINS