Mistakes to Avoid When Picking Stocks

When picking stocks, examining the available financial documents of an organization is a good idea. However, a common mistake that stock investors make when determining their stock picks is focusing too much on earnings per share instead of cash flow.

Cash flow is the true measure of a company's financial performance, not reported earnings per share. For a host of reasons, accounting-based earnings per share can be made to say just about whatever a company's management wants them to, but cash flow is much harder to fiddle around with. Remember this when investing in stocks.


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