5 red flags to look out for when investing in the share market
$Kogan.com Ltd(KGN$ $SPDR Bloomberg Barclays Intl Treasury Bd(BWX.US$
1. Beware of insider selling. Company insiders, particularly the key decision makers, tend to know their business better than anyone else. When they start to sell significant portions of their shares in the company, it could be an indicator that they no longer see much upside in owning the company’s shares.
1. Beware of insider selling. Company insiders, particularly the key decision makers, tend to know their business better than anyone else. When they start to sell significant portions of their shares in the company, it could be an indicator that they no longer see much upside in owning the company’s shares.
2. Beware of companies with contracting gross margins. When margins start to contract, it could be an indicator that the company is being forced to lower its prices in order to remain competitive or that its production costs are increasing but it is unable to pass them on to the customer.
3. Beware of regulatory changes. Some businesses rely on regulatory loopholes and when changes in laws occur, it can destroy a lot of shareholder wealth.
4. Beware of companies that rely on a few large customers. Losing those customers could have disastrous consequences.
5. Beware of companies with a bad culture / unhappy staff. A workforce that is disengaged is unproductive but they still get paid which is a double whammy for shareholders.
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