Stock picking is not just about identifying strong companies. You should also be wary of red flags that signal that a company should be avoided.
Picking the right stocks can be a fun and rewarding activity as long as the investor is committed to being pro-active and diligent. It’s not always a clear-cut case of a company being investment-worthy, as certain factors may make you smile while other aspects may make you cringe.
It would be much easier if there was a cookie-cutter list of exactly what to avoid in lousy investments.
But in the real world, things aren’t always painted in either black or white. Most of the time, investors are dealing with varying shades of grey.
Therefore, having a mental checklist of what to be wary of could help. With that in mind, I would like to share four red flags that should alert investors to potential trouble at a company....