The fact that some of the same people behind Factom were behind Mastercoin is a red flag.
Well, that's arguable. Statistically 1 in 10 projects are bound to fail anyway. And we don't know for certain who is responsible for the 'disaster'. Needless to say, all projects should be researched with proper due diligence. Many people in the crypto space seem to suffer from immediate excitement which leads them to throw money at anything, or paranoia towards failure (far less common). Emotionality is the downfall of any investor. Reliance on facts and research is always the best course of action, which lead me to XCP in the first place. There wasn't any crazy hype, there wasn't a huge crazy marketing effort, but the facts made sense. Factom should be treated the same way.
Do the facts make sense? Y/N..
Does it have a competitive advantage? Y/N.
Is there constant research and development required? Y/N (especially negative if completely NEW paths have to be researched, and the fundamentals have to be changed).
Does it require a continuous stream of funding? Y/N.
and so on..
(Ironically something I picked up from Warren Buffett, who recently called Bitcoin a 'mirage'.)