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Chapter 9. Looking Ahead: The Core Roadm... > Transferring Risk Management into Ac...

Transferring Risk Management into Action

Once we accept the premise that core earnings adjustments need to be made, we still need some method to limit our stock selection criteria. Using the basic handful of fundamental indicators is a good starting point. The analysis of sales and earnings, PE ratio, and capitalization is a strong beginning for identifying fundamental strength. However, we also need indicators to limit the search realistically; with thousands of strong, well-managed companies to choose from, how can we boil down the list to fewer than 20 candidates?

We propose that one possible approach is to select stocks that have increased dividend payments over many years. We do not suggest that dividend history should be a sole means for selecting investments. However, there are sound reasons to use this as a starting point:


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