[DesertCat]

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I wish this was a teachable skill. What would help one leanr that? Looking through history or is it more of a feel thing/common sense

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I think it's a learnable skill. You examine lots of potential ideas and learn what's worked and what hasn't. You learn to be less afraid of words like bankruptcy, liquidation, recapitalization, and think of them less as failures, and more like opportunities (while their current shareholders can only think failure).

In the end, handicapping is all about odds given. I have one stock that has $1.50 in net cash assets minus all liabilities. The problem is that it's liabilities are environmental cleanups associated with any of it's former properties. So if they are mis-estimating their cleanup costs, it could easily be a zero. But it's trading for 25 cents, so if it's a zero less than 5/6 times you could show a profit. Now I don't know anything about environmental laws and cleanups, other than what the company documents in their very detailed financial reports. But taking the companies worst case estimates makes me think I'm getting a really good price unless management is just deluded (and if mgmt is being conservative, the liabilities could be less and the stock worth more than $3). So I bought a small amount (Bankroll managment precludes buying too much of any position that is potentially a zero). This isn't the best example since I try to actively avoid stocks that have real risks of going to zero, but it's a good example to illustrate how to think about deals in terms of the odds they are giving you.

I've found that many of these deals the markets act as if a 20% risk you will lose 50% is priced as if it's a 80% chance of a 50% loss. You don't have to be an expert in a specific area, as long as your research makes you confident the risk is much closer to 20% than it is 80%. Most investors don't even take the time to make these estimates, any risk of a 50% loss just means sell immediately to them.