How do you know when it's safe to invest in a stock?

I think the number one thing is the financial health of a company. The most important thing is to check for revenues increasing on a quarter-by-quarter basis. Another very important thing about a stock is the management team. If you open a stock 10K, which is published once a year, they have an analysis of the management team. You want to read about them to get an idea about where they worked before and their credentials. This helps you understand if they're fit to run a company. You also want to look at valuations. You can check PE ratio and PEG ratio as a good way to compare different companies across the same industry in order to see how undervalued or overvalued they are.