Thoughts

In the bottom analysis, a company is successful if it makes money, and if it fails to make money it goes out of business. Now, clearly there can be periods, often at start-up, where the initial investment precludes profitability for a period of time. Of course there has to be a clear path to a money making future, even if that requires certain events to take place.
Of course a path to profitability that is dependent on external events has significant risk. The amount of risk or likelihood that the plan will work is what makes research so valuable. The old axiom, build a better mousetrap and they will buy it, is only true is it is, a lot better, or a lot cheaper and they know about it. Clearly there are times when the popular product is not actually the better product. Having good product does not guarantee success but I think ultimately having bad product will guarantee failure.
So who should you invest in? Value investors like companies with a proven track record of success, possibly selling at a discount. One could look at a company such as GE that has a number of successful divisions but which went out of favor because of its financial division. It would seem that ultimately, the profitable divisions will prevail and the financial division will be jettisoned or turned around. Of course, if you looked at the stock market a year ago and didn’t see some great value buys, you weren’t looking very hard.
Of course you can’t go back in time, so where is the value today? You hear people talk about how this has become a stock pickers market as opposed to I guess someone who just buys indices. With recovery continuing and no other good investments in sight, the odds are pretty good that the markets as a whole will continue to increase, although not in a straight line. So if you are patient, the S&P index or a sector index could be a good idea.
There is no certainly no certainty and there are those who are convinced all the gains of the last year are going to vanish as we explore that bottom and go even lower. I don’t see that happening, but a few puts could be a nice insurance policy, to protect profits, just in case.