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here are some of the characteristics that would make a company "high risk" (for me):

1. a high price; price to earnings, price to revenue, price to cash flow
2. erratic revenues/earnings/cash flow
3. negative cash flow
4. high amounts of leverage debt/equity
5. low returns on equity and assets
6. low profit margins; negative profit margins
7. increasing amounts of unsold inventory; asset writedowns
8. non-shareholder CEOs; multimillion dollar pay packages to senior execs
9. a company bleeding cash and using leverage to pay a dividend
10. company uses stock options and new issues to dilute equity
11. large, multi-billion, multi-national company doing business on virtually every continent
That doesn't sound like a recipe for "high risk", it sounds like a recipe for "high loss"! :eek:

FWIW, I know someone personally that invests the way the Taleb describes. IIRC he had 75% of his money in cash, GICs, OSBs and the like. The balance was invested in small/micro caps and high yield securities. He told me that he had invested this way for over 30 years and only ever had one losing year. I don't know how he is invested at the moment because I haven't spoken to him in quite some time. He sold all of his high risk investments in early 2008 so I wouldn't be surprised if his track record is still intact.
 
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