A Big Red Flag - The Popular is not Popular at this Blog

In the investment world, we must learn how to play defense. Just like any good sports team, a good investor has an offensive mode without forgetting about defense.

By nature, I'm a very positive person. However, I'm always searching for red flags in a company that would tell me to stay away.

Two years ago, I was researching a company and I saw that they issued an announcement about the effectiveness of one of their drugs for Severe Acute Respiratory Syndrome (SARS). It was about the same time that SARS began to become prevalent in the media, the new hot story on CNN. I researched the company's SEC filings and there was no other reference to SARS in the company's SEC filings. I would bet that company didn't even have a strain of the SARS virus to test their drug and yet they were stating that their drug could be effective. That type of claim was about as credible as me saying that I could play shortstop for the New York Yankees. There was simply no solid basis for that claim.

Over the past 6 months, we've seen a few companies participating in the Bird Flu Olympics. I would stay away from those companies.

Look out for an announcement from a company to announce that their technology could have saved the miners in West Virginia. Then, run and don't stop.