How You Would Have Fared if You Had Avoided These 'Red Flag Alert' Stocks

When I joined Empire Financial Research two years ago, the idea was to take everything I learned researching possible shorts as a way to find longs... As I wrote at the time, "I don't want to be the grumpiest guy in the graveyard." In my paid newsletters, I have enjoyed green-flagging the stocks of genuinely […] Not rendering correctly? View this e-mail as a web page [here](. [Empire Financial Daily] How You Would Have Fared if You Had Avoided These 'Red Flag Alert' Stocks By Herb Greenberg --------------------------------------------------------------- [URGENT: Ukraine Update from Whitney Tilson]( Whitney has put his life on the line in Ukraine – twice – in the past few months. Now, he’s making a controversial prediction about the outcome of the war. If he’s right, the world may never look the same. [Click here now for all the details](. --------------------------------------------------------------- When I joined Empire Financial Research two years ago, the idea was to take everything I learned researching possible shorts as a way to find longs... As I wrote at the time, "I don't want to be the grumpiest guy in the graveyard." In my paid newsletters, I have enjoyed green-flagging the stocks of genuinely good companies like Weatherford (WFRD), which was just out of bankruptcy at the time... Allison Transmission (ALSN), which was not green enough... or even Novo Nordisk (NVO), which I recommended just as the weight-loss craze was getting underway. Readers who followed my advice on Weatherford and Allison Transmission in my [QUANT-X System]( newsletter are up 174% and 46% since March 2022 and June 2022, respectively... and readers of my [Empire Real Wealth]( newsletter who followed my advice to buy Novo in September 2022 are up 84%. That's fun. We have our losers, too, but I'm convinced they'll eventually be winners – much better buys at lower prices than when we launched coverage. You know what else is fun? Sticking true to who you are. No matter how hard you try, your DNA is your DNA. As much as I like finding stocks that will go up, my DNA is wired to be skeptical if not downright cynical... It's who I am, and it plays into a stock market that is set up to reward blind bullishness. An important part of making money is avoiding losing it. Put another way, finding "stocks to avoid" is as important as finding stocks to buy. That's why I started the Red Flag Alert ('RFA') here at Empire Financial Daily... This is where I highlight stocks that deserve to be red-flagged. I launched it on May 9, and here's how the stocks that I've red-flagged have performed so far... In addition, Tupperware (TUP), Cava (CAVA) and Sweetgreen (SG) might as well be on this list. They're down more than 50%, 40%, and 20%, respectively, since I turned the spotlight on them over the past two months... just not under the RFA banner. Going forward, single-stock warnings will be bundled under the Red Flag Alert. Here's the thing... Even stocks of dubious companies don't usually fall as much and as fast as these stocks have. I (half) joke that by publishing this list I'm probably jinxing myself. If history is any guide, their rapid declines could very well be a sign this market – with as little conviction that it has – is at an inflection point and could spring higher. Historically, when my red flags start making me look smart – and people start paying attention – watch out! But it doesn't really matter because in the short term, these stocks can have a mind of their own... and very possibly could be great trades on both sides. That's up to them... But the concept of the Red Flag Alert is straightforward: Unless you're an active trader, with thousands of stocks to choose from, why pick these? Or as my friends at quantamental research firm Kailash Concepts wrote a bit more bluntly in bold in a report the other day on highly leveraged companies that don't generate enough cash to cover their interest payments... This just isn't complicated. If you own these fragile firms, we encourage you to ask yourself "WHY?" That's because the best way to make money is to avoid losing it, and stock avoidance is as important as stock selection. --------------------------------------------------------------- Recommended Link: [America's secret 'Deal with the Devil' could expire on December 3]( At year's end, every American could suffer from the greatest "wealth shock" in history. Stock markets around the world could drop by thousands of points... and the price of every item currently sold in stores could increase exponentially. Forbes says, "We may be witnessing the end... " [Click here to learn what YOU should do starting TODAY](. --------------------------------------------------------------- That's a very basic and simple concept that more often than not gets lost in the noise... I started the Red Flag Alert mostly for fun, in part because I missed that part of what I've done for decades. But I also strongly believe knowing what can go wrong is as important as knowing what can go right. That's why I think something like the Red Flag Alert should be part of every investor's bag of tricks. It's like insurance: Nobody likes it but they're glad they have it if they need it. If nothing else, it might make you double-up on your own research... and you might gain even more conviction – or have a view that whatever issues I raise will be meaningless years down the road. Data has played a big role in my idea selection... Most of the ideas so far have come from mixing and matching stocks that are ranked lowest on various monthly quant screens published by Kailash. In theory, these are all the most likely to underperform the market over the next 12 months... maybe longer. Screens like those are a jumping off point for further research, of course, and can be false-negatives or positives... but so far they've proven to be a solid source of ideas. Ideas have also started to find their way to me the old-fashioned way: Through friends, readers, and my rekindled network of sources. If you have any ideas you think might be worthy of being red-flagged, don't hesitate to pass them along. – you can them to me via e-mail by [clicking here](mailto:feedback@empirefinancialresearch.com?subject=Feedback%20for%20Herb). Just beware: I do my own work before I publish and I have a very high rejection rate, missing more than a few good ones along the way. Some just catch my interest more than others. It's the intangible of investing and picking which stocks to research. Speaking of the Red Flag Alert... [Last Thursday's essay on Bowlero (BOWL)]( sparked some reader feedback, including this one... "Aloha Herb! I love your writing. This report cracks me up. C'mon really? Bowling alleys are collectively owned as a publicly traded company? They are the ashtrays of America with overflowing trash cans. What else is possible? Caveat emptor. And bowlers don't speak Latin." – Scott W. Herb comment: Now, now, Scott... I know bowlers who speak Latin. But your point on publicly traded bowling alleys is a good one, since they've never worked in the past. Then there was [this exchange on X]( in response to my post on Bowlero... Source: X/BenBrey To double-check what he was saying, I went to set up a reservation for a "family" at a San Diego area Bowlero. I wasn't just stunned, but gob smacked... When I was a kid growing up in the southwestern part of Miami, the bowling alley was next to a roller skating rink. (For those wondering, it was Bird Bowl on Bird Road. It's still there, but the skating rink is gone.) Bowling and skating were cheap ways to spend a Saturday afternoon... or any day in the summer to get out of the heat and humidity. Based on its website, Bird Bowl offers extremely competitive prices that are lower than Bowlero's. Granted, I haven't been to Bird Bowl in probably five and a half decades, but if you do a search on "when did bowling get so expensive?" there is no shortage of stories. That's because by any standard, in any decade, in any galaxy, $171.84 for four people to go bowling on a Saturday afternoon is absurd. Not sustainable, either. Something surely has to give. Finally, these comments on bowling dovetail nicely with another reader comment in response to the Bowlero essay over at Substack, where I also post these missives... "Really nice take. I wonder if this could be a microcosm of the wider consumer economy over the last year or two. People seemed to be willing to pay any price coming out of the pandemic be it airline fares, potato chips, steak sandwiches, houses, cars, or coke. Maybe this is some kind of post-pandemic psychology where the US consumer, who is not known for great price discipline has had zero. "In a world where credit card servicing costs are up substantially with wages slowing that might be ready to change. To this point I have felt like I'm the only one saying no to a 6 dollar bag of Doritos. Do people really want to pay 25% credit card interest rates for that?" – Brett R. Herb comment: On the credit cards – only if that's their only means of buying it, which itself would not be good. The pandemic party/hangover effect is very real. Here in California, gas prices near $7 add to the equation, for sure. As always, feel free to reach out with your comments via e-mail – you can do so [right here](mailto:feedback@empirefinancialresearch.com?subject=Feedback%20for%20Herb). Regards, Herb Greenberg September 25, 2023 [Get a 30-day, 100% money-back trial to Empire Real Wealth by clicking here.]( --------------------------------------------------------------- If someone forwarded you this e-mail and you would like to be added to the Empire Financial Daily e-mail list to receive e-mails like this every weekday, simply [sign up here](. © 2023 Empire Financial Research. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Empire Financial Research, 1125 N. Charles Street, Baltimore, Maryland 21201 [www.empirefinancialresearch.com.]( You received this e-mail because you are subscribed to Empire Financial Daily. [Unsubscribe from all future e-mails](