“‘Tis the Season!”
Corporate Earnings reporting season, that is! And, as you would expect, get ready for scary headlines!
As economists, analysists and talking heads stumble and bumble over every little word the CEO’s, CFO’s and CIO’s say, remember a few things we have learned over the last several decades.
- A quarterly report is for 66 days after you subtract weekends.
- The three “C’s” noted above tend to use economic slowdowns, like we are in, to clean house. This is when they fire the slackers, restructure anything they messed up, kill contracts they decided were not to their advantage, and generally clean house.
- They use all the bad news possible to justify #2 above and to reduce their positive outlook to lower profit numbers ahead. Profit numbers so low, they will be able to step over them like a string.
It is simply how the reporting season works. “Always” has and “always” will.
Yes, I know! The big banks have set aside hundreds of billions in “reserves” for bad loans. Those that don’t quite exist yet. Hmmm… and what if those loans don’t turn bad, or fewer do than expected? All that “reserve” money comes back later as “earnings” just in time for bonus season.
There are no bells ringing at “the market bottom valuations” but there are hand signals and audibles everywhere you look, so be on the lookout for opportunities, as we are here for the WSG client family.
If you would like to observe a few of the “signals” take 4 minutes to read the summary from the piece I wrote for the January 2023 issue of The Seven Signs of a Changing Economy™ (Read it Here). This makes the clues around the bottoming process about as clear as it gets.
I’m interested in your thoughts, comments, and observations. Feel welcome to call, email or stop by the office and say Hi.
James O. Lunney, CFP®
CERTIFIED FINANCIAL PLANNER™ Professional
Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.