if a company has a history of declining income should I invest?
Adalberto asks:
I am thinking about investing into a company that’s in it’s IPO stage. I checked out their records and it shows a trend of declining income. The company currently has 231 share holders and has no venture capital. (I was told that the CEO has invested all of his own money into the company). Is this a wise investment choice? Of course they make it souund like the potential to make a lot of money is very high. It’s an internet company and it already has the website in existence.
I am thinking about investing into a company that’s in it’s IPO stage. I checked out their records and it shows a trend of declining income. The company currently has 231 share holders and has no venture capital. (I was told that the CEO has invested all of his own money into the company). Is this a wise investment choice? Of course they make it souund like the potential to make a lot of money is very high. It’s an internet company and it already has the website in existence.
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I think you are trying to convince yourself.
One of the very first lessons I learned - the hard way - was to stay away from IPOs and very inexpensive stocks.
There are PLENTY of investing opportunities. Since I’ve been trading, there hasn’t been one day which went by, where I haven’t seen and analyzed at least 20 different companies. I enjoy doing analysis AND successfully trading.
For each trading strategy I use, I have rules.
Its very simple:
If a stock/option doesn’t pass any of my rules, I don’t and I won’t trade it.
In other words, I look for reason NOT to get into a trade as opposed to reasons why I should get into a trade.
Thanks for asking your Q! I enjoyed answering it!
VTY,
Ron Berue
Yes, that is my real last name!
Hahaha! NO! First off, never invest in any IPO company. For every stock that made it, 1000 of them are trading OTC for .000001 cents. If there were audited financial statements for the past 5 years at least, then you can go off of that. But when you mention that their financials are decreasing, that seems like a red flag to me. What do they do? Sell soap? Sell Q Tips? Found a cure for cancer? It depends on what they have going for them.
Overall though, when I don’t invest my emotions are at a 5. When I gain then I am happy at a 8. When I lose though I feel like a 1. The losing money feeling is stronger than the winning feeling. So if I were investing in them, I would save my money and find something better.
You might ask yourself what they are going to do with the money they get from the IPO, maybe they are just doing this for a chance to unload the CEO’s shares at a higher price, I believe in investing my money in good companys’ meaning they are making more money every year. Try http://www.thewallstreethunter.com for some good stock picks, they have a pretty good track record and offer daily market summary’s of whats happening on wall street,