Earnings Bungee Jumping
Watching the reaction to some earnings report is like watching people jumping off a bridge with a bungee cord.
It a lot of drama, but in the end goes nowhere.
It’s remarkable the overreaction some stocks get for the slightest miss or sometimes even gains. With time and more sober analysis and interpretation, the net result is a value very close to the starting point.
So who’s making the knee-jerk reactions? It just might be a computer on a fast algorithm or maybe a day trader or a trader on a trading desk hurrying to skim a profit. These are very short-term momentum players. At other times there may be real information in the earnings report, but a two second review does not reveal all that much.
So far, earnings are looking good. There is real growth in revenue too; more about this in future blogs. In the meantime, stay steady, my friends.
The Lonely Bull