earnings announcements

[jacknapier]

Am I the only one who thinks they should do earnings on a yearly basis? I don't see any reason why they need to more frequently. I was looking at some long term charts and I noticed that everyone of them didn't have earnings releases in the 1990s. I'm guessing that the SEC had the "genius" idea of forcing companies to make these announcements to prevent fraud(I couldn't type that with a straight face) or something similar. Kind of like some of their other brains farts like the PDT rule to prevent people from losing money in the market.

You know, I would be much more inclined to open long term positions, except for that ominous earnings announcement one or two weeks away.

 

[skoob]

If you release earnings 4X a year, there are higher volumes and volatility... which leads to more volume and options. Both of which are sources of revenue for the exchanges....

 

[Jack o'Clubs]

If you're a long term investor the noise around quarterly earnings shouldn't make much difference to your game plan. You also have four times a year where you get some detailed information on the company's direction and the opportunity to hear what management have to say. If something is going badly wrong (or right) in the business model, more opportunity to pick it up and act on it in good time. You don't like the volatility around quarterly earnings? Imagine what it would be like if you only got information from the company once a year. Betas and volatility measures, plus the track record of earnings surprises can give you a hint of the companies most likely to give you sleepless nights around earnings if you'd rather avoid them.

 

[jacknapier]

If you're a long term investor the noise around quarterly earnings shouldn't make much difference to your game plan.

Hm... When I think "long term" I mean 3 to 6 months. In that case, earnings could very well change the game and disrupt the reasoning for my trade. I have a "forever" hold or two, where I don't even bother listening to earnings because I'll know if something is wrong with them with or without earnings calls. That's why I don't find them particularly useful. In those cases, earnings misses are good opportunities to add, but I don't add multiple times a year, unless I come into some big money.

But yea, it's a double edged sword. If they did it once a year, there would be at least twice as much volatility surrounding earnings. I think you want enough volatility to profit, but not so much that you puke.