These are guidelines, not rules. Over the years, I’ve picked up a few tricks of the trade, which might come in handy for you punk rookie bastards.
Avoid owning stocks who’ve missed earnings within the past 4 quarters. See DDD and CREE for anecdotal evidence.
If the SEC is investigating your company, it’s best to avoid it.
If your stock went up on merger news, sell it. The deal might fall apart later on. See Shire.
If you bought a stock, it went down, then the volume dried up. That might turn into a roach motel. It’s best to avoid and buy something with greater liquidity.
Avoid companies with debt/equity levels over 4, unless coming out of a recession and the underlying industry is turning the corner. If that’s the case, that debt laden company might soar in price, thus naturally lowering said ratio.
Avoid holding stocks with price/sales ratios over 15 for extended periods of time. More often than not these stocks will correct, severely, at some point.
Avoid biotech stocks with phase 1 drugs, burning through cash, years away from a revenue stream. That company will do dilutive financing at some point, in order to fund their research.
Avoid stocks who have large debt payments due. If XYZ’s bonds are coming due and they don’t have the cash, they will either restructure (with bank’s permission) or do a dilutive secondary.
This one sounds simple, but is sometimes ignored. Avoid stocks that go down all the time. The odds of you catching the bottom on a falling knife is low. Wait for the stock to base out and strengthen before buying.
Winners rarely correct–because the business is great. Sometimes it makes sense to chase growth, even if the multiples are high. Great companies will meet and exceed estimates, rarely giving dip buyers a chance to get in.
If you want out of a stock, quit playing retard games with limit orders. I can’t tell you how many idiots end up stuck in bad stocks because their limits don’t get hit. If a stock is $30×30.05 and you want out, put a limit order of $29.90 and get done. Or, if it’s a very liquid stock, do a market order. The same thing applies when buying. While limit orders can save you money, often times, I find them to be time sinks and a pain in the ass.
Avoid owning Chinese burritos that have come under scrutiny from renowned short sellers. More often than not, they are right.
Feel free to add some of your red flags.
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Beware of stocks where CFO has recently resigned.
yes. That’s a good one.
2007 top — false break of the 200 DMA, then new highs.
http://deflationland.blogspot.com/2014/10/eerie-similarity-between-2007-top-and.html
A senior trader once told me, “If you don’t know who the sucker is, it is probably you..”
Red flag when a stock reverses on good earnings.
If you ever hear a crying baby on the conference call, sell (LITB).
If, after speaking to CFO, you get the sense he is an idiot, sell.
If said stock is being actively marketed by promoter, avoid.
LOL and thanks for the list
What about if the CEO has bad teeth?
GOGO, sell
+1
Leave your emotions at the door. Using your money to reinforce your moral code is the path to destitution.
Someone once said if a company misses by a penny to sell, because if they couldn’t come up with that extra penny a share to meet expectations,they’re maxing out on growth.
Avoid levered inverse ETFs, they *never* end well.
If a company just declared bankruptcy (and the stock drops to pennies), it’s probably not a cheap buy.
EGLE??
Easy to cherry pick successes. You’re not in that court room where decisions are made. You’re definitely the dumb money during bankruptcy proceedings.
+1
Any of you realize that Ebola has a 21 DAY INCUBATION?? AFTER election day we might just be hearing about a WHOLE LOT MORE cases…
Tip: If this turns out to be true, short after the news breaks, not in anticipation.
There is always a better entry than when the idea strikes.
Never invest in a stock that’s relies on pandemics succeeding (you can trade if you’re a gambler though).
Never invest in a company trading on rumors (unless you’re the one spreading them).
When there is a spinoff, one of the two companies frequently does better than the other and it isn’t always the obvious one.
Sorry, I skimmed right over the red flags part. I like to buy the least loved of a spinoff pair.
Gross margins decelerating is often a warning that growth is peaking
Ere’s me “Can you add a cliche” contest Cap’n:
-The easy money has been made
-The low hanging fruit has been picked
-The Tesla’s, the Google’s and the Facebook’s (add name here)
-It’s a stock pickers market
Feel free to add more…
“Throw the baby out with the bathwater.”
… and avoid buying stocks going to zero.
Cap’n, if your Wednesday turn around ‘n’ down prediction comes true, you are confirmed as a genius. only 12 mins into the open but it looks like some bulls got ‘sucked in’…
Of course it’s still VERY early into the session… ANYTHING can still happen.
Average buying the market when their have been days of selling and your hand is shaking as the fingers approach the “buy” button. This is especially true after you have the dry heaves towards the vomit bucket and refuse to look at your brokerage account balance because you are scared that you are almost wiped out.
Start average the selling of the market when it has been going up continuously and one believes that (s)he is a stock god and can whip Fly in any stock picking contest.
ANGI.. Just plain and simple.
she is a whore…
1) Between cash from operations (or investment income in financials) and stated revenue is where companies hide their dirty laundry.
2) If a company is growing but shareholder equity is not, the company may as well not be growing.
3) After you work out what the company is approximately worth, impair their wishy washy assets by 10%, just to see what happens.
4) If company disclosures get too specific, it’s because they have something in mind.
Excellent list.
Always avoid stocks that have had surprise earnings misses in the prior QTR.
Avoid stocks that have significantly more chatter and buzz than usual. Avoid any stock that isn’t an already hyped up TSLA,AAPL,FB in which you hear someone talk about it that has no business being in stocks. (neighbor,barber,shoeshine,bartender,etc)
Avoid stocks that have bullish magazine covers and consider buying stocks that have bearish ones.
[B]
Always sell a stock when you are wrong, always admit when you are wrong. Define a spot in which you are “wrong” before taking on the trade with very few exceptions. ALWAYS ensure that your upside is 2.5 times that of your downside or larger, except for hedges and allocation based strategies.
[/B]
There is an exception to every rule… even this one.
Avoid stocks that go through a reverse split. More downside likely.
Avoid diseases like the plague… Especially if said disease is actually the plague!
Conversations with me wife. Arrr….
Don’t buy or sell stocks.
Get a great job or start your own business.
And don’t even look at a streaming computer quote as you dollar cost average into Vanguard funds over your life.
+1
Best thing I’ve read in 6 months on here
don’t buy breakouts until new support holds for awhile
If its tied to the vix, youre gonna get the fix. As in your nuts will be tied off and removed against your will.
Once the CNBC heads start talking about it, do the opposite of what they are saying.
Avoid ZH at all costs, unless of course you need a good laugh.
This might sound crazy, but I think jim cramer makes solid macro calls.
You’re right…that did sound crazy
Well, keep in mind that Cramer screamed his infamous “they know nothing” in August of 2008. If you got out then, you may have been spared infinite pain.
His stock picks are trash though. Monkeys with darts do better.
market very choppy so far today; round n round she goes…
BDBD went badonky-donk
How a trader feels when he finds he’s been screwed/misled into a deal:
https://www.youtube.com/watch?v=ROmCW3to4M8&list=PLB7wscTVMbAoeg1lMG9q3BVVeumaSSKGi&index=6
clip titled
“Boardwalk Empire – Luciano & Lansky Lose Heroin Business “
Anything with high fixed costs and little or no control of pricing. Think mining and shipping.
.
… when in a Steak Restaurant … don’t order Fish !
.
Especially Steak ‘n Shake.
Dance like nobody’s watching…Bad idea
If you ask, they have to tell you they’re a cop…Bad idea
Don’t worry, most dogs like people…Bad idea
Whatever advice sounded good at the time when you were near lows is more useful near highs (risk management). Whatever advice sounded logical near tops is more useful near lows (maximizing opportunity)…. or put more simply…
“do the opposite”
Was the reported Islamic terror attack in Canada ‘the excuse’ bears were looking for to make Cap’n Fly a prophet once again?
I was going to load up on more AMZN puts tomorrow, but today may have been a better day.
The next drawdown.
That conference told us NOTHING.
No matter what the reason for the market being down is, the fact is the Cap’n called it TO THE DAY. Now the only question is will we bounce back, hover here, or sink deeper…