I realize this is a shorter term trading forum, however I am looking for some insight into risk management. I use fundamentals to pick holdings with a time frame of a year or more. In the short term fundamentals are useless but I feel they are quite useful longer term. My philosophy is that the market over-does things in both directions and that over time stocks revert to some mean valuation. If one can buy a stock that is trading at a very low foreward P/E, and one can assume that the even if the company misses estimates it will still trade at a low FY PE then it seems to be a good long term low risk buy. Take TYC for example. I assess that company to be worth at least 30. Essentially buying here is a bet that over time the stock will double before it goes to zero. Comprising a company of say 20-30 such picks (long as described and short do the opposite) would seem to yield impressive results over time while minimizing transactions and taxes. Once the stock reaches its "fair value" you cover or sell. In trading the idea of 2-1 or 1-1 reward/risk comes up often. Isn't what I described similar except over a much longer time frame. Please note this is not a challenge to short term trading or a knock on TA, I am simply trying to gather opinions on how to make long term investing more profitable assuming valuations tend to revert to some mean.