Compounding your capital is a far easier task to undertake if you don’t have to start by recouping your losses. Over the last year, successful investing has been as much about avoiding the bombs as it has been about picking winners. For example, an equal weight holding in the five worst performing ASX300 stocks (SGH, LNG, PAC, PRT & 1PG) for the last 12 months would have seen capital losses to the tune of 72%. Needless to say, those holding these names have a substantial job in making up lost ground. With this in mind, Livewire reached out to fund managers to address a few questions on avoiding value traps and protecting capital. In this series, we ask each contributor to share what they believe is the single most important indicator of company health. Responses come from Justin Braitling, Matt Haupt, Chris Prunty and Simon Bonouvrie.