How we can lose money

There are several situations we try to avoid where we think the probability of loss is too high for us to find the return interesting, irrespective of how large it may be potentially. (1) High leverage, non consistent free cash flow and/or non liquid high quality assets combined (2) No revenue growth and declining margins, yet high FCF yield (3) Small FCF yield (overpaying) (4) Capex heavy cost base creating problems in an inflationary environment from high spending and high borrowing costs to fund the maintenance capex (5) Decreasing demand (i.e. product substitution) (6) Increasing supply (including changing market structure) (7) Quality of business model declining