very now and then even the best brokers and investors are caught off-guard by a stock that tumbles down and makes them lose money. Sometimes it’s a few dollars, sometimes it’s millions. And while it’s not possible to see the future and accurately predict every time a stock will go down, there are warning signs that could help to protect your investment.
As you already know, the markets change all the time, and stock investing requires regular attention. You must keep a close eye on things and constantly reevaluate your options.
Here are 5 warning signs you must consider in your daily reevaluations:
- When earnings for the company (or for the entire industry) are falling.
History shows that stock prices ultimately rise or fall with the earnings of the company. If you see a company’s earnings fall, there’s a degree of certainty that its stock will follow. Keeping an eye on the company’s “earnings per share” is a good place to start.
- When company insiders are selling.
Company executives are expected to show loyalty to the company above everything else. But they’re human beings with families and personal interests… and they’re not interested in losing money any more than you are. So if you know that one or more executives are selling considerable amounts of stock, pay attention!
- When the company releases an oddball product.
A desperate company will often release a product that doesn’t fit their norm when their future is looking bleak. Does that new product they just launched make sense in their overall strategy? Or is the company launching a “Hail Mary” and praying to strike gold?
- When there’s a systemic problem.
Has technology, law or other external aspects changed the way the industry works or are having a negative effect on the industry? The world around us keeps changing all the time and technology accelerates it… Just ask BlockBuster or the traditional travel agent.
- When the economy is tanking sensitive industries.
Consumers are much less likely to buy an expensive watch, a new TV or recreational vehicles during challenging economic times. It pays off to pay attention to the big picture and the overall economic climate.
How to pick winning trades – with up to 73% accuracy
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This new video by former Wall Street analyst Daniel Stocker explains how online trading works and how anyone can get involved and start making money by trading in the financial markets in a matter of hours.