One of the most interesting (and sometimes stressful) times of the year, is Earnings Season – a period after each fiscal quarter where publicly-traded corporations must report their earnings to the public. Companies will usually release their reports throughout March, June, September, and December, but some will submit their reports even later.
One significant aspect you (as a investor) might notice is that earnings releases usually are reported after markets close, The main reason for this is that both the reports and the news surrounding them tend to affect company stocks, and therefore, they wish to mitigate stock volatility and minimize any potential losses as a result.
So Earnings Season are here, As we all know many companies reported their earnings and typically these quarterly financial statements include:
– Company Earnings
– Profits and Losses
– Balance Sheets with assets and liabilities
– Analysis of the company’s financial condition
**So what can you do to be ready when earnings season comes?**
## Here are 4 Tips that will help you make the most of Earnings Season:
1. **Review Previous Statements:** One great tool in your hand is access to the corporation’s previous statements and earnings reports (You can do that by going to company’s website and look for ***Investor Relations*** section). if their previous reports were all positive, it’s a good indicator of how their next earnings report is going to look like. Spend some time and do your own research – it’ll be worth it.
2. **Follow Markets News:** Always keep track of the market’s and industries’ news, it is good to know which companies are expanding into new markets, growing their services, diversifying their products or even purchasing other companies, as this shows you that these companies along with their financial positions are more than willing to increase their sales and ultimately their profits.
3. **Diversifying your Portfolio:** , certain Industries outperform others in a volatile markets and it is good practice to protect your investment portfolio when the markets aren’t doing so good especially if you’re a new investor (and still learning). ***Always*** make sure that your portfolio consists of diverse stock options & mutual funds.
4. **Be Wary of your Emotional Sentiment:** This last one is probably the most significant advice an investor should take care of, *YOUR EMOTIONAL STATE,* just because your favorite company took a toll down, doesn’t mean that you sell your shares at a loss, in fact you should always keep your emotions in check and rationalize your decisions based on ***Fundamental/Technical Analysis*** , and just like what the infamous Warren Buffet said “Only when you combine sound intellect with emotional discipline, do you get rational behavior”.
Finally when it comes to investing, most individual investors are better off diversifying and owning many companies, and not trying to pick one or two stocks that will be the winners. When you diversify, you eliminate the risk of any one company performing poorly and substantially impacting your investment returns.
Developing a financial plan, and one that is dynamic and evolving to meet your needs over time, and creating a risk-appropriate, well diversified, and low-cost investment strategy to support it is often the right strategy to produce the best investment outcomes over time.
