Junk stocks usually do not pay dividends for many years, and even if they do, they are often negligible, like squeezing toothpaste. The reason why such companies are reluctant to pay dividends to shareholders is not a lack of profitability, but an extreme stinginess and a reluctance to share profits with shareholders. They are more inclined to transfer profits to others through various means, and these "others" are often cronies within the company, and may even be the majority shareholders themselves. They use a variety of profit-shifting methods, such as through business related transactions (selling at low prices), lending or pledging assets, injecting junk assets, and even through large-scale mergers and acquisitions of shell companies. These tactics prevent the company's profits from truly benefiting shareholders, which in turn harms the interests of investors.
Added content: Junk stocks do not pay dividends for a long time, which often leads to the inability to effectively protect the interests of investors. These companies are often reluctant to share in profits, but instead transfer profits to insiders or related parties in various ways, causing damage to shareholders' interests. This unfair distribution of profits not only harms the interests of shareholders, but also may damage the company's reputation and long-term development. Therefore, investors need to carefully evaluate the company's dividend policy and profit distribution when choosing investment targets to avoid losses caused by investing in junk stocks.
Junk stocks tend to be frequently sent high, often in the form of a large proportion of allotments or shares, sometimes even a "10 to 10" ratio. This kind of high transfer is essentially a blank check for investors. If the size of a company's share capital is not small (more than 500 million), but it still makes frequent high transfers, this is not beneficial to the stock price, but may lead to the stock price to continue**. In contrast, high-quality companies tend to cherish their shares and do not give away shares easily, such as Moutai is a typical example. Therefore, the excessively frequent high transfer does not indicate that the company pays generous dividends, but may be the company's internal management chaos, resulting in damage to shareholders' interests.
Additions: Behind the high turnaround, the company's poor financial condition or operating difficulties may be hidden. Frequent high transfers may lead to the instability of the stock price, and at the same time, it will also bring investment risks to investors. In order to cover up their financial problems, some companies resort to high transfer and other means to attract investors' attention, but such short-term incentives are often unsustainable and can exacerbate the company's operating difficulties. Therefore, investors need to prudently analyze the real situation of the company and avoid blindly following the trend of investment in the face of high transfer phenomenon.
Junk stocks tend to have frequent violations, which are not accidental, but commonplace. The frequent violations of laws and regulations by the company's top management mean that they deliberately violate the rules in an attempt to deceive investors for personal gain. The majority shareholders of a company that often violates laws and regulations often have bad intentions and only think about how to obtain personal gain through fraudulent means. This dishonest way of doing business is destined to make it difficult for the company to operate for a long time, even if the short-term performance seems to be bright, the major shareholders will try to swallow the interests privately, because their original intention is to make profits for themselves, and the listed company is just a tool for them to make money.
Addendum: Companies that frequently violate laws and regulations often have moral hazard and operational risks. If the company's top management regularly violates the rules, it means that the company's management lacks integrity and responsibility, and only pursues self-interest regardless of the interests of investors. This way of doing business is often not conducive to the long-term development of the company, and it is easy to fall into business difficulties or legal disputes. When choosing investment targets, investors need to carefully assess the company's compliance and moral hazard to avoid losses due to investing in non-compliant companies.
The stock price of junk stocks often appears in a straight line, which does not give investors enough opportunities, and once the rise is too large, it often ushers in a long period of time, resulting in a bottomless stock price. This phenomenon is seen from the point of view of the manipulator. Once this kind of ** is hyped, even if it falls to the bottom, it is difficult to get support, because the manipulators themselves are not optimistic about this kind of **, they just use some kind of good to manipulate the stock price, once the target level is reached, they will take risks to clear the goods. Therefore, it is very common for this type of ** to fall even below the bottom because the manipulator does not protect the market, causing the stock price to continue**.
Addition: The lack of persistence** in share prices may reflect signs of corporate governance or manipulation. The stock price of some junk stocks rises and falls erratically, often under the control of manipulators, and lacks real intrinsic value support. Investors who are attracted to this short-term manipulation may enter the market at a high level and subsequently suffer the risk of persistent. Therefore, investors need to carefully evaluate the company's stock price trend and manipulation risks when choosing the best investment target, so as to avoid stepping into the trap of stock price manipulation.
Junk stocks tend to fall into the red frequently and rarely make a profit. This year, it is expected to usher in a large-scale delisting wave, some long-term ups and downs, repeatedly hit new lows of garbage**, unless there is absolutely good news, investors had better stay away, so as not to step on the minefield, causing huge losses. After all, making money in ** is not an easy thing to do, and in order to avoid risks, investors must avoid excessive pursuit of uncertain profits so as not to suffer significant losses due to risk-taking.
Additions: When choosing investment targets, investors need to carefully evaluate the company's profitability and financial status to avoid blindly following the trend and leading to investment risks. Some junk stocks tend to lose money frequently due to poor management or deteriorating financial conditions, resulting in huge losses for investors. In the face of this kind of **, investors should keep a clear head, rationally judge the risk, and decide whether to invest according to the actual situation of the company. Only by being fully prepared and risk controlled can we obtain a stable return on investment in the world.
Junk stocks have many obvious characteristics, such as long-term non-dividends, high-frequency and high-transfer, frequent violations of laws and regulations, lack of sustainability, frequent losses, etc. This type of ** is often accompanied by high risk and low returns, and investors should remain cautious and avoid blindly following the herd or taking risks. In investment decisions, it is necessary to fully understand the company's fundamentals, financial status and profitability to avoid huge losses due to the pursuit of uncertain profits. Only through in-depth analysis and risk assessment can you make informed investment decisions and obtain solid investment returns.