Translated by Andrew Vanburen from: 短炒順勢而行 長揸先秤基本因素 (中文翻譯, 請閱讀下面)
IT IS EASY to get bogged down in the seemingly endless losses that most of us are suffering on a daily basis in the stock market.
In such a prolonged bearish environment, the paltry returns that savings accounts offer even begin to look tantalizingly attractive – if it weren’t for the fact that in most countries around the region, the rates that lenders offer are still below the growth in inflation.
On the corporate earnings front, quarterly results are in and things are not good.
And how can we forget as the holiday seasons approach and a forgettable 2011 winds down that we have more bad news to look forward to with full-year earnings announcements?
Are there any trees high enough to hide from the bears?
Now is a perfect time to truly scrutinize third quarter reports, and work to get a leg up on where 4Q and full-year results are headed.
First of all, we all must realize that those firms with “flexible” reporting dates – firms stretching their announcements to the last possible moment of release – are very unlikely to have good tidings for investors.
It’s a rule of thumb, but it is not watertight, and some late-announcers do indeed surprise on the upside.
That being said, it’s best not to bet the farm on any late surprise stories.
We must also be somewhat wary of overly pessimistic guidance that might be on-the-record for various listcos as their announcements come due.
How many times have we panic-sold after some of these proclamations, only to kick ourselves as results “surprise” on the upside, and “the Street” once again looks somewhat foolish for their rash rash of downgrades?
The New York markets, with their after-hours trading, often provide perks to those who stick around after the lights go out (including insomniacs) who reap the harvest after a late-breaking story on M&As, guidance revision, management shuffles or new product breakthroughs.
There is nothing more frustrating to a shareholder than to nod off late at night after a final ticker check only to wake up at dawn to find a star stock in your portfolio has moved down double digits during the witching hour.
And of course there are those less scrupulous pollyanas in the corporate world that hate to be the bearer of bad news at any cost, and massage the math to find the bright side of any balance sheet or sales outlook.
Fool me once...
As the saying goes, “Fool me once, shame on you. Fool me twice, shame on me.”
Seasoned investors are likely to buy into upbeat guidance at first. But losers have long memories and if shareholders recall putting their chips on faulty guidance once, the more savvy among them will probably not take the bait a second time.
In other words, overly sanguine forecasts and guidance revisions can fight off the bears at first, but if they prove false, they will only be crying wolf if they try it again anytime soon.
It is important to keep in mind that in many ways, the “art” of short-term forecasting is a far less exact science than is predicting long-term results.
By way of example, let us look at the manager of a taxi fleet.
He may learn from the radio dispatcher that his troops are amassed around the airport several miles from the city center, frittering away their morning shift while idling in line and producing nothing but expensive petrol fumes.
Meanwhile, the company's cabs remain unmanned, save from the driver, and the clock ticks slowly and agonizingly closer to noon.
Then, all of a sudden, dozens of cabs in front of your team give up the fight, call it a day, and head back to headquarters with empty vehicles. At the same time, several long-haul, wide-body international flights arrive ahead of schedule and there is a massive exodus of humanity from the front gate of the airport, all frantically waving for a taxi, meaning... paydirt.
By a slight stretch of the imagination, let’s say you owned “stock” in this taxi firm and monitored its revenue flow from market opening right up until lunchtime.
Unless you had money to burn, you would begin to get anxious as your drivers inched forward in an endless line of vehicles, with no passengers in sight.
But if you only waited until lunchtime, you would have recouped your investment – and then some – as your troops raced back with sleepy fares to the financial district at 110 km/hr in light traffic, only to immediately be picking up new passengers as the jet-lagged crowd disembarked.
My somewhat roundabout message here is this: In downtimes, don’t make the mistake of assuming “This is as good as it gets.”
Sometimes, after a good hearty lunch, things always find a way of picking up.
In this extended bear market, there is nothing wrong with thinking long.
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