You can’t take all of the risk out of investing. But you can certainly reduce it. If you are 55 or older, never borrow money to invest. It’s better to have the alternative of drawing down your investments. Also, never buy stock in an initial public offering. It’s too risky.
Always buy index funds. Never invest in a company that is indebted. Never invest in a company that is overvalued. Buy the entire company only if the price is less than half of its current market value. Never invest in a company that is bankrupt. Never invest in a company that has had five consecutive quarters of negative earnings. Never buy stock in a company that is not economically seasonal.
Never buy stock in a company that has a management change announced. Never buy stock in a company that has inherited a bad business model. Never buy stock in a company that has a negative return on equity. Never buy stock in a company that has negative cash flows. Never buy stock in a company that has negative earnings per share.
Never buy stock in a company that has a toxic balance sheet. Never buy stock in a company that is going bankrupt. Never buy stock in a company that is delisted from an exchange. Never buy stock in a company that has a negative return on invested capital.
source : Quora
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