Might be a cynical view in part, but these are future share purchase considerations for me. Experience is often the only way one learns unfortunately.
1. Don't even think about catching a falling knife industrial stock for at least 18 months after initial fall.
2. Don't get sucked in by a high dividend.
3. Don't buy a stock where the div is financed by debt (any fool could loan money from a bank and pay themselves a dividend out of it.)
4. Don't be comforted but be wary of underlying motivations when multiple Directors buy falling knife stocks (eg SPO Director purchases during Dec 2015).
5. Stay clear of large companies that appear to be losing market share as they will most likely continue losing it to leaner, hungrier competitors.
6. Set a stop loss upon purchase and act on it. Falling knife stocks can fall in stages as the true and complete situation of the company is revealed over time.
7. Be aware that complete and continuous disclosure may be more of an ideal than a reality. Therefore attempted financial analysis by investors can lead to false conclusions and poor decisions.
regards
SPO Price at posting:
72.5¢ Sentiment: Hold Disclosure: Held
