Preparing For The 2011 Summer Earnings Season
Earnings season is right around the corner, kicking off Monday, July 11, with Alcoa’s earnings after the market closes. With the daily slew of positive and negative economic indicators we should be in for a bumpy ride. The market will be looking for some justification whether the economy is improving and will find it with any corporate year end revisions.
Second Quarter Review
The markets were on a slide for most of the second quarter. That is until it finally got some finality to a few things recently. The annual European and Greece bailout is almost finalized. The approaching debt ceiling that the U.S. needs raised is likely if congress will actually vote already. The markets been in undecided mode. Its direction will eventually be determined by corporate forecast revisions more than actual earnings. A great earnings release will mean nothing if a company revises it’s year end forecast down.
An overabundance of lowered revisions will bring more emphasis on the negative economic indicators that have shown a slowing in the economy. However, if earnings revisions are mostly unchanged or improved, the positive indicators will be reinforced and we’ll see the market take off for the second half of the year. Which is more inline with my own views, but will have to wait and see.
What You Need To Do
With all earnings seasons, it’s the perfect time for your quarterly investment review. Going over your finances as a whole should be done four times a year and if you have savings in stocks, bonds or mutual funds the perfect time to review or make adjustments is during an earnings season.
If you own stocks take the time to listen to or read the conference call transcripts. Keep an eye out for potential opportunities and put a shopping list together of potential investments. Revised earnings forecasts will offer big stock price moves. Lower revisions may offer a nice discounted stock price to buy.
As always take advantage of any new information and apply it to your investment strategy. Make changes to the areas that no longer meet your goals. Do a little homework. You’ll profit in the long run.
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