Red Flags

Red Flags will alert us to avoid stocks that are very likely to be in trouble. By knowing what are the red flags, we can reduce the chances of losing money. Doing research before trading will help us to find out what the red flags are. That will save us from making losses from investing. The most serious red flag for me is a company in heavy debt and does not have enough cash to settle the debt. This will be very serious if the business slows down suddenly or make losses continuously. The banks may not be willing to extend the loan to such a company and it may even be forced to shut down.

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