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The related CNBC piece cites a McKinsey study on the actual effect -- "Those in favor of guidance say it improves communications with Wall Street, reduces share
by kjw 8y ago
The related CNBC piece cites a McKinsey study on the actual effect -- "Those in favor of guidance say it improves communications with Wall Street, reduces share price volatility and boosts a stock's value. But McKinsey & Co. found in a 2006 study that quarterly guidance didn't affect valuation multiples and didn't reduce share price volatility. The only significant benefit it observed was an increase in trading volumes, which is good for day traders but not useful for most other people."
https://www.cnbc.com/2018/06/06/warren-buffett-and-jamie-dimon-join-forces-to-convince-ceos-to-end-quarterly-profit-forecasts.html https://www.cnbc.com/2018/06/06/warren-buffett-and-jamie-dim...
- lostmsu 8y ago> which is good for day traders So, for common folk? Or do they mean people, who do it professionally?
- adventured 8y agoProfessional day traders. https://en.wikipedia.org/wiki/Pattern_day_trader https://en.wikipedia.org/wiki/Pattern_day_trader And usually when day trader is referred to in the financial industry, what they really mean is a professional trader that moves high volume for one person (you can technically be a pattern day trader at relatively low volume).
- hbosch 8y agoDay traders are people who trade the same equity within the span of a single day, basically, or that’s the definition at a brokerage. If you were to flip an equity a couple times in a single day often enough, you’ll be labeled a “pattern day trader” and you will be legally forced to maintain a minimum balance of $25,000. Someone correct me if I’m wrong.
- rpedela 8y agoIsn't that only if you have a margin account but cash accounts aren't required?