x
Read this morning a brief article about five stock types to avoid:
Speculative manias - The "FANG" stocks – Facebook (FB), Amazon (AMZN), Netflix (NFLX), and Google (GOOG); They're trading at absurdly high valuations.
Expensive stocks - Most higher-quality businesses are too expensive today. S&P 500 companies aren't doing very well these days. Don’t over pay, check for lower than average PE Ratio’s.
Cheap garbage – Don’t get trapped by a “Value Trap” just because a stock is cheap doesn’t make it a good deal. A smart investor must be aware of what kinds of stocks he should avoid. Sometimes the best move in the market is the one you don't make.
Financial engineering schemes – These are companies that are buying back stock at over-valued stock prices. It's easy to create shareholder value by buying back the cheap stock of a good business. It's just as easy to destroy it by buying back expensive stock... which is what most companies do most of the time.
Growth stories in tough industries - The restaurant business is among the worst for investors along with the oil industry, most oil and gas stocks became busted growth stories when oil prices started plummeting two years ago. They were leveraged bets on high oil and gas prices, and the businesses simply don't work at today's prices. Many will still go bankrupt.
Visit my blog for other financial articles at DFI Wealth Strategies
Daniel Iuculano
