5 Warning Signs Of Stock Decline

Basic knowledge of stocks and the stock market typically tells the retail investor there is no real indication of when a specific stock will start to decline. Contrary to this, however, savvy investors know this is actually not the case when looked at closely. It's all about reading the signs correctly. With this in mind, here are five major warning signs of stock decline everyone should pay attention to if they wish to be successful in the stock market.

Sales Slow Down

The basic principle of buyers and sellers applies to the purchase and sale of securities as well. If sales of a particular security slow down, expect a reduction in the price of the stock as well. Fewer buyers mean less competition overall, which in turn means sellers are more eager to sell. Both of these factors point to a decline in stock price.

Additionally, the sale of the product from the underlying company may slow down. This is completely natural for organizations, as they run on a fiscal year and spend money according to their quarterly budget. Therefore, if net sales are being reviewed, it is important to make the distinction between annual net sales (revenue) and monthly or quarterly numbers. Sales are, in many scenarios, seasonal and will fluctuate. However, if a company shows annual declining numbers and other contributing evaluations show the organization is weak in various areas, it may be time to take a loss.

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