Why Pay Attention to Earnings?


In this week’s webinar, the MarketSmith team highlighted some key reasons why investors need to pay close attention to earnings announcements. Here are three of them:

·         Earnings reactions are a coin flip

Regardless of what the actual numbers are, the Street’s reaction varies, based on a number of factors, including earnings’ guidance, number of customers, or the focus of the company moving forward. Even when everything looks positive and the numbers are good, stay tuned to the stock’s action. It can still go down instead of up.

·         A negative reaction can be damaging to the portfolio

A stock going down on earnings, sometimes goes straight down—and fast. If you’re not closely watching, it could potentially destroy your portfolio. Based on your entry position (the price at which you purchased the stock), have a decision already made about the price at which you need to lighten or sell your position. If a company you own is no longer profitable, you need to take that very seriously, no matter how much you believe in the company’s vision or leadership.

·         Reactions are more extreme with a lot of gaps

The severity of a price advance or price decrease because of earnings can be very extreme. Gap ups and gap downs are more common than ever, and could make or break your portfolio.


To learn more, take a moment to watch our webinar “Make the Most of Earnings Season with MarketSmith” by clicking here. As always, if you have any questions or comments, please contact us at (800) 424-9033.

Best returns,


The MarketSmith Team