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Stocks don't react to how results in announcements compare to last year, stocks react to how results in announcements compare with how Wall Street priced the st
by Eliezer 16y ago
Stocks don't react to how results in announcements compare to last year, stocks react to how results in announcements compare with how Wall Street priced the stock yesterday based on their guess to what the results would be. Efficient markets 101 - otherwise you could make money by buying, one day in advance, stocks that obviously probably did well compared to last year. If this is not obvious to you then you should never invest in anything besides index funds (seriously, I've seen people do really badly by not understanding elementary implications of the inexploitable markets hypothesis).
- anatari 16y agoUm, missing earnings means earnings was less than what the wall street analysts expected, it doesn't mean it was less than last year.
- Symmetry 16y agoI thought it generally meant that it was less than the company's own predictions, not the analysts? In any event it shouldn't matter which estimate they're falling short of as long as it isn't the market's implicit estimate.