Avoid lawyers

Not to trample on any of the BOFI threads, when it comes to lawsuits, unless you are extremely knowledgeable about the case, you can be certain that the outcome will be uncertain. You have to get inside the brain of lawyers, judges, and juries. As a rule of thumb, if there is a serious suit against a company, I’ll avoid it instead of running the risk. The one exception is if a stock drops so much as to make it a bargain even with a bad outcome. I did buy BP after the Macondo incident and Merck after they withdrew Vioxx. I made money on both.

Banks, because they have credit risk, are a specially bad bet, IMO.

Denny Schlesinger

7 Likes

The one exception is if a stock drops so much as to make it a bargain even with a bad outcome
A very good point.

But in practice the legal system is often so erratic and unpredictable that it is hard to know just how bad a bad outcome will be in advance. Then there are appeals etc.

RAMBUS of the dot.com fame, is a great example, too.
The legal battles stretched on… and on… and on… and…

ralph