Such an important point - as an investor you are being asked to make decisions in the face of uncertainty, recognising the greatest risks are usually resident in the areas you haven't looked, and that's on you.
Due diligence fundamentally consists of recognising and assessing my risks
Absolutely. All the more reason to keep checking and asking yourself if you can understand what's happening or, when there's new news, whether it's something you could have / should have anticipated.
For example, I wasn't surprised when Diageo cut its dividend, because I couldn't see how they would achieve their free cash flow and leverage objectives with the current dividend, especially given their payout ratio. I was a little more surprised, but I shouldn't have been, at some of their assets sales, because I should have seen that was one of their only available levers to de-lever with their current FCF.
Such an important point - as an investor you are being asked to make decisions in the face of uncertainty, recognising the greatest risks are usually resident in the areas you haven't looked, and that's on you.
Due diligence fundamentally consists of recognising and assessing my risks
The problem is risk remains the thing you don't see. A lot of the times it's very difficult to predict!
Absolutely. All the more reason to keep checking and asking yourself if you can understand what's happening or, when there's new news, whether it's something you could have / should have anticipated.
For example, I wasn't surprised when Diageo cut its dividend, because I couldn't see how they would achieve their free cash flow and leverage objectives with the current dividend, especially given their payout ratio. I was a little more surprised, but I shouldn't have been, at some of their assets sales, because I should have seen that was one of their only available levers to de-lever with their current FCF.