Earnings Season – Cramer’s wrong, you can make money!
On the brink of an earnings season, a period where most quarterly corporate earnings are released to the public, investors are often hesitant to risk capital for potential potent growth. On CNBC’s ‘Mad Money’ Jim Cramer stated that “it's impossible to make money during earnings season[…]”. If the market is driven by speculation, earnings season is a period of time where stocks are most volatile. Volatility implies uncertainly, and uncertainty implies risk. But there is a way to manage risk and protect your capital, while ensuring this time of year is one of your best ‘earnings seasons’ – TimelessWealth.net explains.
Large Corporations, Industry Leaders, or ‘Fortune 500’ Companies, are typically first to report their earnings (for the most recent quarter). Their financials often model how well or how poorly an industry has performed in micro and macroeconomic environments. Based on reported earnings from companies with a large market share in predefined industries or sectors, the market begins to draw conclusions in the form of patterns and trends. Industries expected to perform poorly are discounted and often ‘dumped’ with exaggerated ambition. Instead, traders and investors flock to an industry or sector expected to outperform analysts’ forecast. If you’ve positioned yourself alongside a company explicitly expected to ‘outperform’ forecasts early on, you have a chance at financial bliss. If not, you’ve already missed the ‘run-up party’. So when you find yourself at crossroads as to how to reap the rewards offered during earnings season, consider the following three-step design:
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