Last updated: 1 October 2025
Objective:
Identify potential red flag issues that an investor may wish to investigate further regarding a stock.
Explanation:
Investors often focus on growth opportunities and valuation upside, but the biggest risks to capital frequently emerge from overlooked red flags hidden in company accounts, management disclosures, or the broader information environment. This prompt is designed to systematically surface those risks by interrogating financial statements, earnings transcripts, and credible external sources such as news, credit agencies, research reports, and corroborated social commentary.
The resulting report organizes findings into clear risk categories and traffic light materiality assessment, ranging from accounting quality and credit stress to management turnover, shareholder dilution, and litigation exposure, flagging where evidence exists and noting when none is found. By structuring the analysis this way, the report helps investors move beyond headlines to assess whether material red flags exist, how they could impair earnings, cash flow, or valuation, and what signals to monitor going forward.
As always, be aware that models can make mistakes. At each step, examine the response and challenge information or conclusions that appear erroneous before proceeding to any subsequent steps. If in doubt use a second model with the same prompt to verify the information and generate challenge questions and answers (CoVe process) to correct interpretations of data.
Link to article:
Preferred Model(s):
Gemini 2.5 FLASH over ChatGPT-5+ due to length of attached information
Important Execution Notes:
The prompt works best with the more information you attach to support the analysis
It is recommended to attach the last three earnings report and last three earnings call transcripts.
For this reason Gemini’s architecture and longer context window is preferable as is its integrated google search capability. However, the FLASH version of Gemini often works best over PRO as the complexity of the task can stall the system. (This can be avoided by pre-processing the documents - see separate utility prompt).
Insert the company’s TICKER, EXCHANGE and COMPANY name in the Inputs section
Specify the lookback window for online information sources (default 12 months).
Sample Output:
Copy/Paste Prompt Set:
Important note: Subscribers can use this prompt set for their own analysis. However, the prompt is copyrighted by The Inferential Investor, paywalled, and must not be shared without permission.