Warning Signs to avoid Bad Investment

Investing is about balancing risk and reward. Reaching our investment goals will take patience and hard work.  Avoiding bad investment is an important key to successful investing. It can take several years for a portfolio to recover from a few wrong investment that could have been avoided in the first place. As such, investors need to be watchful for warning signs that could signal companies in trouble. While continuous decline in earnings may be a reason for concern, investors should be more wary of companies that struggle to maintain a consistent cashflow profile, especially those that show continuous negative cash flow over a prolonged period as these companies tend to run a higher risk of insolvency. Increasing and high debt level is another warning sign to watch out for.  Debt is not necessarily bad as it can be used to improve earnings and profit margins. But when companies are struggling to make scheduled interest and principal payments, this is a huge red flag to watch out for as such companies run a higher risk of liquidation should they be unable to meet their debt obligations. Other than unusually high insider selling that can be interpreted as an ominous sign, investors can check if a company's shares are the target of short sellers, especially hedge funds that aggressively bet against a company's share price. When a company's shares are consistently targeted by short sellers, it could be an early warning of greater danger ahead. Investors should also be cautioned should there be any frequent change of auditors  or if a company changes its auditors abruptly as this may indicate that the company could be trying to conceal information they do not wish to disclose. To help spot stock I should avoid, I would always relook at a stock whenever I notice consecutive quarters of declining earnings, a company's cash shrinking or debt increasing. Unusual insider sales, heavy short selling or auditor resignation are other warning signs that a company may be in trouble.
$BlackBerry(BB.US)$
$Clover Health(CLOV.US)$
$ContextLogic(WISH.US)$
$Luckin Coffee(LKNCY.US)$
$Oatly Group AB(OTLY.US)$
$SNDL Inc(SNDL.US)$
$Virgin Galactic(SPCE.US)$
$Zomedica(ZOM.US)$