Earnings season refers to the period in which companies report
the results of their business’s earnings to the market, updating their balance
sheets and giving guidance for the upcoming quarter and year. The earnings season is a time when investors either
get triumphant or feel extremely down.
It’s a season of mini heart attacks. It’s a season of pride or disappointment,
depending on how well or how bad your companies perform.
It goes without saying that in this season you get a chance to
reassess the standing of your investments.
It’s a time when you can prepare for the upcoming quarter and see what
you can do for your portfolio.
In this article, we’ll talk about how you could sift through
the season and squeeze as much information as you can get from the
reports. Read on!
Write down the dates
The first thing you got to do is to know when your holdings
will be reporting their earnings. Search
your tickers one by one and save the dates.
Be sure to write specific details about the date like the
exact time when the report will be released.
Write them in the proper order, that is, who will go first, second,
third, and so on.
Write down the date of your key stocks
You can expand the first list you have made by adding the
leading stocks and their earnings dates.
This is because the manner in which the leading stocks react to their
own earnings will often impact the other stocks in the group.
Don’t change your treatment of the positions
Simply, you have to treat every position you have in the same
way as you treated them before the earnings release. When you stick to the pre-set guidelines for
each position, you get rid of the emotion and regret.
If you do that, you can easily make the activity more of a
numbers game and nothing more. If your
holding perks up and performs better than what you expect, you’re fine with
it. If it misses and completely becomes
dull, you’re also fine with it.
Moreover, you can apply this same principle to take into
consideration the leading peer stocks that are going to report before your own
holdings. If the leader of the other group
blows up the game and sank knee deep, it could also happen your own
holdings. You’d get a better view of
what may happen to you in the future.
Don’t get emotional after the reports
For post earnings reactions, regardless of the outcome, you
should be emotionless. By preparing the
exact same way, the rules you have been following prepare you for any kind of
outcome.
After you have removed the emotions, you can better react to
the earnings results.
Review and tweak
After everything has been reported, it’s time to conduct
post-season analysis. No matter how the
trade became successful, the good and the bad should be noted down along with a
screenshot of all the charts. Rules remove emotion and keep you disciplined,
though it takes a lot of time. Nonetheless,
you should tweak your rules and proceed with enough confidence.
Conclusion
The earnings season is a time when investors try their best
to get a view of the future by using the data from the past compiled by the companies.
You should take advantage of this time.
Gather the information you need and try your best to manage risks even
before they appear.
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