4 ms·
If stocks moved up when earnings were good and down when earnings were bad, it would be pretty trivial to game the system and double your money every month or s
by gibybo 14y ago
If stocks moved up when earnings were good and down when earnings were bad, it would be pretty trivial to game the system and double your money every month or so. The reason is that quarterly earnings are not that hard to predict - everyone knew well in advance that Microsoft was going to report a loss this quarter, for example. What they didn't know is exactly how much it was going to be, so they bought and sold based on their best estimates. It turns out this quarter they estimated that the earnings were going to be a little worse than they actually were, so the price corrected itself when the real amount was announced.
- seanmcdirmid 14y agoInvestors are not stupid, they have their own discounts or stock targets in mind. The price of a stock will always adjust one way or the other depending on new information; "not as bad as I thought" or "not as good as I hoped" can cause stock rise on negative results and stock falls on positive results. If you want to game the system, you need to commit fraud and inject misleading information into the system, I hear this happens quite often.