The job of an investor is to select and buy shares to create a stock investment portfolio. The so-called stock investment portfolio is a set of shares chosen according to a predetermined investment strategy. It is expected that the selected stock portfolio will be able to meet the investment objectives, whether it is for pension funds, buying a house, children’s education funds and so on. But wrong stock picks can be fatal and break up all these goals. What’s worse is if you buy rotten stock. Is that rotten stock? What are the consequences of buying rotten stock? You can read this article to know more about this, and you can go to https://magodomercado.com/aprenda-como-investir-na-bolsa-de-valores-comecando-do-zero/ to learn more about investments in general.
Actually, the rotten stock is just my term. Rotten stocks for me are stocks that are not worth investing in. Usually are stocked with fundamental defaults. Characteristics:
1. More frequent losses than profits
2. The debt is mountainous
3. Negative cash flow, can not finance the company’s operations
4. Involved with legal issues / have a bad reputation
Usually, this rotten stock also includes fried stock, the price can be very volatile so that it attracts investors who want to get rich quick from stocks. But unfortunately, stocks like this, in the long run, tend to continue to fall until it can touch the lowest price. Or the most severe delisting or crossed out of the stock market.
Investing in shares is like buying a basket of fruit. The basket is a portfolio, which you must fill with selected fruits. The point is quality fruit, which is a company with good fundamentals. Why? It’s because later you might need to sell all the fruit in the basket. How can you sell if the fruit is rotten? Where does anyone want to buy? Even if someone wants to buy it, they want it at a very cheap price.
So as much as possible, choose your stocks as well as possible. Use Fundamental Analysis to help find stocks that have good fundamentals. Look for high-quality stocks, not rotten ones.