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"When the measure becomes the target, it ceases to be a good measure." Something something something. Forwards looking earnings guidance is also a pet peeve of
by LinuxAmbulance 1y ago
"When the measure becomes the target, it ceases to be a good measure." Something something something.
Forwards looking earnings guidance is also a pet peeve of mine - I've had plenty of stocks take a significant decline because a given company was a few or even a single percentage point shy of what they'd predicted from the previous quarter.
Assuming accurate predictions can be made is foolhardy, and if a company actively makes changes to meet the prediction that are at the cost of long term profits, it doesn't help anyone but day traders, the worst of the worst.
- murderfs 1y agoThe funnier scenario is when the company beats their earning predictions, but the stock drops because analysts were predicting that they would beat their predictions by even more.
- gruez 1y agoThat shouldn't be surprising at all when the price of the stock is based on investors' expectations, and it's possible for analysts' guidenaces to hold more sway than the company itself. For instance if the analysts' guidance was issued later
- lotsofpulp 1y agoThat situation is unremarkable, if you understand prices are a function of supply and demand, and supply and demand are always in flux.
- crazygringo 1y agoWhy is that a pet peeve though? Of course a stock will decline when news is worse than expected. The same way it rises when news is better than expected. And there are always going to be, and should be, expectations. So I'm not really sure what's supposed to be wrong with that? That's how stocks have always worked, and will always work.