While we’ve chatted before about red flags to watch for when screening potential buys or current holdings — including delaying filings and earnings misses — unfortunately, the list goes on.
There are a few distinct classes of investments that almost always are trouble for your portfolio, even though they may not be obvious trouble spots. I like to call these investments “pickpocket investments,” because oftentimes you don’t know you’ve been had until you go for your wallet … then realize it’s too late.
To help reduce your risk and protect your holdings, here’s a detailed description of five types of investments I think could cause serious damage to investors who aren’t on their guard: dividend cutters, low-volume stocks, dumpster dives, high-frequency trading targets and fashionable investments.
Let’s take a look at each group.