Valuation can be considered a barometer of perception: a highly valued stock may represent unrealistically high expectations, whereas a low valuation may indicate undue pessimism. Fairly valued or undervalued securities typically present less risk of downside loss than overvalued securities.

Financial strength is a key indicator. The appropriate amount of financial leverage for a particular company is a function of several factors including the nature of the business, the cost of financing and the current stage of the business cycle.

An operating analysis identifies the elements of a company’s business strategy or economics that could cause significant changes in revenues or earnings. For example, is a company’s cost structure predominantly fixed or variable and its implications in a recession.

A company's sensitivity to the business cycle and interest rates will determine the Economic risks. Individual sectors may also exhibit cyclical behavior that is separate from the broader business cycle. Israel Investment Advisors, LLC seeks to understand the major economic risks associated with a particular company or industry.

Every business faces the possibility that the development of competitive technologies, products or services will be detrimental to its future prospects. Some companies, however, face more significant risks than others. We estimate the degree and nature of technology or obsolescence risk inherent in a company’s business or products.

Israel Investment Advisors, LLC believes that continued legal and regulatory reform in Israel is a major source of economic growth and investment opportunity. We pay attention to legal and regulatory developments to help identify opportunities, but these same changes can also present potential risks.