8 Investing Mistakes Investors Make & How to Avoid Them

► Need Term or Health Insurance?
Schedule a free 30-minute consultation : https://ditto.sh/0bxlo5

► 26,000+ readers have joined my Investing Newsletter
Subscribe Now : http://shankarnath.com

In this video, we'll explore 8 investing red flags that can help you detect early signs of trouble, making your investments more secure and turning you into an informed, vigilant, and successful investor. The 8 investing mistakes are as follows:
1. Delayed Financial Reporting: This not only impacts investor confidence but also stock prices, as demonstrated by cases like Balaji Amines and Byju's.
2. Excessive Director Remuneration: Section 197 of the Companies Act specifies limits on director and manager remuneration. When companies exceed these limits, as seen with Sun TV Networks and National Peroxide, it's a red flag
3. Auditor Resignations: For example, Deloitte quitting as the auditors for Manpasand Beverages led to a 55% share price drop.
4. Pledged Shares: If the pledged share ratio increases sharply, it raises concerns, as seen with Max Financial Services.
5. Abnormally High Dividend Payout: While high dividends are appealing, an excessively generous payout can signal underlying issues like financial distress, lack of growth opportunities, or earnings manipulation. Vedanta Limited's case is a striking example.
6. Corporate Governance Issues: Gaps in corporate governance, such as insider trading or accounting irregularities, can severely impact a company's stock performance, as shown by cases like Brightcom, Lux Industries, and Aurobindo Pharma.
7. Frequent Fundraising: Frequent capital infusion can be a sign of financial instability, dilution of existing shareholders' stakes, and increased debt levels, as demonstrated by Manpasand Beverages
8. Sudden Increase in Debt: A substantial and sudden increase in a company's long-term borrowing is a major red flag, as seen with cases like Kingfisher Airlines, DLF, Suzlon, Moser Baer and Pantaloon.

👉 Video Chapters:
00:00 Investing Red Flags
00:55 1. Unexplained Delays in Financial Reporting
02:30 2. Excessive Remuneration to Top Management
04:14 3. Unusual Auditor Changes
05:45 4. Frequent Share Pledges
07:32 5. Abnormally High Dividends
09:39 6. Corporate Governance Issues
12:18 7. Frequent Fund Raising
14:32 8. Rapid Accumulation of Debt
15:58 Shankar's Viewpoint

👉 Additional Readings & Resources:
‣ https://2point2capital.com/blog/index...

#investingmistakes #redflags #stockmarketmistakes

Disclaimer: I am not a SEBI registered investment advisor or research analyst. I am not registered with PFRDA or IRDA either. The content posted on this platform is purely for educational purposes and none of it constitutes investing or trading advice. Viewers should do their own research and diligence before investing or acting on the information presented. Some of the links I have posted in the video, the description, the comments and other related resources might be affiliate links