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July 6, 2015 | Wall Street Abuzz in Quarterly Earnings Madness

Adrian Mastracci

Adrian Mastracci, Discretionary Portfolio Manager, B.E.E., MBA. My expertise in the investment and financial advisory profession began in 1972. I graduated with the Bachelor of Electrical Engineering from General Motors Institute in 1971. I then attended the University of British Columbia, graduating with the MBA in 1972. I have attained the “Discretionary Portfolio Manager” professional designation. I am committed to offering clients the highest standard of personal service by providing prompt, courteous and professional attention. My advice is objective, unbiased and without conflicts of interest. I’m part of a team that delivers comprehensive services and best value in managing client wealth.

“If a business does well, the stock eventually follows.”
~ Warren Buffett

You can feel the new buzz!
No, not about Greece.

Ladies and gentlemen prepare to start your engines.
The Wall Street earnings madness begins tomorrow!

Markets are gearing up for the quarterly parade of S&P500 earnings and future guidance.
So let’s delve into one exercise common to reporting companies.

That is, the need to deliver better than expected results.
Quarter, after quarter, after quarter!

It feels like watching the Indy 500.
There will be oodles of moves before the race wraps up.

Analyst estimates and expectations have become benchmarks for companies to match or beat each quarter.
A very tall order for every CEO, quarter in and quarter out with precious little room for error.

Public companies live or die under the magnifying glass comparisons to analyst figures.
Investors often make sweeping portfolio changes based on one quarter’s results.

Heaven forbid if corporate margins begin to shrink.
Dare to miss on revenues, profits or guidance and corporate fortunes change in a heartbeat.

Consequently, companies are always trying to manage analyst and investor expectations.
Stock prices can easily slide if reported results don’t measure up to predictions.

Long-term investing has no resemblance to the process just described.
Step out of the frey and think about this herculean task:

Analyst estimates are moving targets that can be tweaked or adjusted at will.
Delivering increasingly better quarterly results is neither easy nor realistic.
Investing lasts a lifetime while patience boils over in one quarter or less.

Companies are in need of some latitude for periodic slippage.
One plus is that contrarian investors use fallbacks to buy the bargains on sale.

Sadly, pressure to perform will continue throughout the quarters ahead.
Perhaps, the Buffett quote points to a better way.

Do yourself a big favour.
Skip the earnings madness about to unfold on Wall Street.

You will make better decisions and your nest egg will improve.
I prefer tuning out the madness and searching for bargains.

Talk soon,

Adrian

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July 6th, 2015

Posted In: Adrian Mastracci Blog

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