When large corporations report earnings, it becomes a popular parlor game to try and guess whether the business of choice grew faster or slower than Wall Street analysts expected during the previous quarter. It offers an occasion for stocks to rise and fall by 3-8% in a single day and that is usually the short-term threshold that catches the attention of investors.
What, then, do I consider to be the ideal position of strength during earnings season?
I think the ultimate objective is to already own a stock that is reasonably valued going into earnings season with liquid cash available to act upon the possibility of opportunity.
Imagine if you already owned a few hundred or thousand shares of Nike going into its earnings report yesterday. Before you know what happens, you are prepared to respond to anything.
If the stock reports earnings that greatly disappoint expectations, you have the … Read the rest of this article!