8 Useful Signs Valuable Stocks are Actually About to Tank

A fall in the price of stocks is not good news for investors. Sometimes, no one expects it to happen thereby leaving the investor shocked and at a loss. Although you can’t always tell for sure when stock prices are going downhill, some indications serve as warning signs to the investor if he pays attention to them.

Here are eight signs that point to an impending fall in stock prices:

 Company and Industry Earnings Fall 

Company and Industry earnings are determinants of a stock price. When they are high, stock investors enjoy a high stock price. However, when you notice a decline in the company’s earnings, that is an indication of an imminent fall in stock price. When this happens, then maybe it’s time for you to sell your stocks and move on.

Top Executives Sell

You suddenly noticed that the guys at the top are selling out their stocks. These guys are supposed to show the highest loyalty to the company. However, who wants to run a loss. It's all about the money in the first place.

When executives sell their shares, it is an indicator that something not good is about to hit the company. It's wise that you keep your eyes open to watch for selling activities in your company.

Cash Reserves are Spent

It's normal that companies will want to stay afloat when they are not making a profit. When this happens, they might want to spend from cash reserve to do so. When your company does that, it is a sign that a financial crisis is looming.

Company Releases Unusual Product

Imagine Nike making burgers or KFC making bags? Sometimes, companies release unusual products to leverage what's selling, make a fast profit, and save themselves from bankruptcy. 

Company Makes Odd Acquisitions

Similar to the previous point, when your company, known for a particular product or service, begins to acquire property and assets that are in no way related to its line of business, it is a telling sign of being desperate to keep the company afloat.

Management Reduces Dividends

Reduction in dividends played to investors is another sign that stock prices are likely to crash. When your company suddenly announces a reduction in dividends, it is most probably a move to save money to rescue the company from bankruptcy. Although it might just be that the company needs money for expansion, most times, it reflects a decrease in the company’s revenue.

Company or Industry System Changes

Change is an ever-constant thing. While change is good, it is not at all times. Sometimes, changes within the company's system affect the company revenue. It can be a merger, change in management, adoption of new technology, etc. These are signs of a possible crash in stock price.

General Economic Recession

The most reliable sign that points to a stock price crash is an economic downturn that affects every sector of the country. Most companies won’t make as much as they made in good economic times. Hence, it is almost certain that there will be a fall in stock prices.

Paying close attention is the one essential ingredient in stock investing. You, the investor, must pay constant attention to market trends. It will protect and save you money to reach your overall investment goals.