5 Reasons To NOT BUY A STOCK
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Good day subscribers. Thank you so much for joining me today I am Jeremy, this is a financial education channel and oh my goodness, how long has it been since I’ve done one of those full, true intros guys, it has been forever.
So today, I want to talk to you guys about five reasons why you don’t want to buy a stock five reasons that if I look at any of these five things, and I see one of these happening, I will not touch that stock.
I don’t care how much the other things are going for that business. If it has one of these five things going on, I will not touch that stock guys. So I hope you really enjoyed this hope you learn a lot from it.
By the way, if you’re kind of newer to the stock market, make sure to check out that third link in the description. That’s my 11 part stock market investing mastery course, even as a private email address to contact me if you have any questions in relation to the course.
If you’re more experienced investor with over $10,000 in the market, make sure you get my stock market membership group, it’s the first link down there in the description, let’s get to this guy’s number one reason why you want to stay away from the stock is is.
If you expect that business is not going to grow over the next three to five years. Don’t even think about getting in that business. Okay, there is no such thing as a stagnant business. So let’s say you’re getting in a stock in your life.
I think they can probably just keep the business they have over the next three to five years. That’s a bad, bad reason to get in a stock, you want to be in stocks that over the next you know, 2345 years.
You can see that business growing, you understand why that business will grow you you believe in that company and why they can grow because they’re doing this they’re making this move, they’re doing that and whatnot.
If you can’t see that guys don’t mess around with that stock. There’s so many stocks out there too invested in so many companies that are expected to grow, you know, heavily into the future.
You don’t want to be stuck in a stock that you know all they might just be able to keep their business stagnant or something like that. Like if that’s the case, just don’t even invest in it. guys think about it.
Like Like there’s a great expression, you’re either you’re either expanding your business or your business is dying. It’s one of those two, there’s no such thing I don’t I’ve been in the stock market for 10 years.
I don’t ever remember a company that their revenues were the same every every year, their net income was the same every year it is so unrealistic guys, they’re either growing or they’re shrinking is one of the two. All right.
The second reason is if that company is not profitable, if this is a corporation you’re investing in and they’re not profitable, you’re taking a huge risk with that company. Okay? Because a lot of the times these companies still have very big valuations on them.
And yes, they couldn’t be profitable someday. But the fact is, at the moment, they’re not profitable. I do not mess with unprofitable companies. The few I have messed with Well, one in particular GoPro that I messed with that was unprofitable absolutely slaughtered me, okay.
You do not want to be in a company that is not profitable. Profits mean, that company can use that money to expand and other things, okay? profits mean, that company can pay you out dividends, or do share repurchases or something like that, like profits mean life for company.
Eventually, if a company keeps losing enough enough money, they’re going to go out of business, okay? Or they’re going to end up having to take out massive amounts of loans, massive amounts of debt, in hopes that someday they can pay off those those debts.
And that will probably just drag the company down under Okay, you’re taking a highly, highly big risk. If you’re investing in unprofitable companies, I would never do that, guys. I just don’t mess with it is not worth it.
So many companies out there and making great profits that are growing phenomenal. It’s not worth being in some company. That’s not even profitable. Reason number three is if the company went public in the last 12 months, don’t mess with companies that have IPO.
Can you make some money in there? Yeah, sure. Sure. Sometimes you can get in a hot IPO. And it’s just going up and up and up. And then next thing you know, it starts going down. Okay, what ends up happening is a lot of times.
Here’s what happens with IPOs, a management team of that company, CEO, founder and whatnot. Sometimes this happens a lot, you see it a tonne, okay? They know their numbers are going to be strong when they’re about to go on the IPO and you know, pitch it to Wall Street and whatnot.
Here’s why we want to go public, here’s our numbers of how strong they are. And they know that even like the next quarter two will be really strong numbers, okay, so it means they can kind of hopefully have a smooth IPO.
But what ends up happening is one, two, maybe three quarters down the road, they also start reporting really weak results, you know, way less growth than what was expected numbers that are you know, not nearly what you Wall Street has expected, not nearly what investors had expected.
And also you see a stock get absolutely cut in half almost immediately, or within a few day period. That’s what happens so often with these companies, because think about it from the from the perspective of a private, you know, company, your life so much easier, so much better, usually.
And then you want to take a company public, it’s like why you even want to take that company public, there’s plenty of private money, there’s plenty of private equity money out there, if you want to raise more money, right.
At the end of the day, like there’s plenty more out there. What happens is a lot of times these companies realise we’re starting to our business is probably going to start weakening in the back half of this year or something like that, or growth isn’t gonna look nearly as strong.
So let’s go ahead and take this company public now with the growth still looks really strong. We can command a really big valuation for it. And you know, everything’s going to look great at first and then it’s going to start going down.
Don’t mess with companies that have IPO recently. Also these management teams, they’re unproven, okay. It’s one thing to prove yourself as a private company, but as a public company is a whole different ballgame. Okay.
As a private company, you make this mistake and that mistake thing and kind of just get swept under the rug. No one even knows about it, except internal people who are probably in the management team as well.
But as a public company, you make a mistake here and mistake there is going to be publicised over everywhere, okay, all over the financial publications, and that could bring down your company more and more and more.
It can weakened team morale, don’t mess with companies that have IPO in less than 12 months, wait till you they got some type of track record out there, you can see where their business is going.
You can see how the management team performs as a public company. And then you can go ahead and get involved with that stock if you want I’d say just wait guys, these happen. So often these people get slaughtered in these IPOs.
They think they’re going to make a tonne of money. And they initially do make some money in the next thing you know, you know, stocks cut in half overnight or something like that. Reason number four is if the company is all defence, and no offence, don’t mess with that company. All right.
The reason now how you can tell this is by listening to conference calls, okay? Listen to conference calls, you can hear the tone of a conference call, if it’s all positive or all negative in relation to competitors. All right.
If all the company’s talking about is playing defence, if that’s all they’re talking about, they’re just talking about playing defence, and how they’re going to, you know, keep market share, and how they’re going to keep market share with this customer and that customer and not necessarily expand market share and expanding to new customers.
If they’re not on the offence, don’t mess with that company. Once again, this almost goes back to the point of companies that you don’t expect to grow in over the next three to five years. companies that don’t really expect to grow.
As far as a management team Board of Directors, those types of companies aren’t just talking all defence, they’re just all defence, you don’t want to be on a defensive Corporation. Okay? You don’t want to just be on a company that it says or revenues last year were $5 billion.
How do we just keep those revenues of $5 billion? Hell no, I want to be in companies that say our revenue was $5 billion last year, how do we grow to 6 billion this year or 7 billion this year or 8 billion this year.
What do we need to do to execute to hit those type of numbers? I like offensive Corporation, not just defensive defence is like, Okay, once again, you’re stagnant. Okay, you’re just trying to keep your revenues at 5 billion, guess what’s probably gonna happen.
It’s probably gonna drop to 4.8 or 4.7, or 4.5. Because you weren’t focused on getting that new customer growing market share, you’re just focused on trying to keep all your other 100 customers.
And guess what happened? One or two of those customers went Bye bye. You just there’s nothing you could do there and then you end up in a company that’s shrinking. Okay. And Reason number five, is that they have a weak brand name for their industry.
I will not touch it. Okay. When I like the companies I like have the strongest or one of the strongest brand names in their particular industry, when I just think about some of my biggest investments.
Their brand names are like the strongest in the industry like Toll Brothers like strongest name and house and home building as far as a premium end, okay. We think about like, you know, elle brands, obviously, you know.
The strongest brand name and underwear and bras like there’s them and there’s everybody else bath and Bodyworks another brand they own like that’s a premium brand in soaps and candles and things like that and then there’s everybody else All right.
If I think about Callaway golf, they’re the number one brand name in all of golf Okay, they’re number one brand name in golf. If I think about Cirrus Logic number one brand name in audio components that go into smartphones and iPads and all that type of stuff. Okay.
Number one brand name those them and there’s everybody else okay? I like to be in companies that are creme de la creme with brand name in their industry okay? Especially especially especially if it’s a consumer industry Okay.
Something where you’re selling items to average consumers out there but even in business to business environment like companies with strong brand names that are trusted because guess what if they’re trusted they’re well known they’re well liked.
Guess what a lot more people are going to want to do business with them and their business is likely going to expand over time guys. So if any of these these five reasons you know come up with a stock and they they meet some of these guys you do not want to mess with those in my opinion.
It’s just not worth it. It’s not worth it. There’s so many great companies to invest in out there that it’s not worth investing in some companies that have some fatal flaws to them not even worth touching on the guys.
So anyways, I hope you really enjoyed this. I hope you learned a lot let me know in that comment section if you have anything to add, I would really enjoy to read those guys. Thank you for watching. Have a great day.