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Henry Jennings | Marcus Today
“A ship in harbour is safe, but that is not what ships are built for.” It is that time again!
Once again, we are entering treacherous waters. Reporting season is now upon us. To keep us informed, some companies have released quarterly reports and even confessions, under the cloak of continuous disclosure requirements and the Conference Season. There are always shocks though; these are inevitable. The smart companies are out ahead of the curve with their Investor Relations teams whispering sweet nothings in the ears of analysts to try to temper expectations. Most serious analysts do tend to run their research pieces by the company just to fact-check their work. It may not change their recommendations, but it stops the analyst from making fools of themselves from time to time. Sometimes they manage to do that by themselves, but at least the company can get a sense of the views.
Despite this, results season is often still full of surprises. In an era of algo trading and computers that read and digest headlines and react in lightning-speed, moves can be extreme on seemingly innocuous announcements. Remember the three-day rule too: usually after results and an emphatic move, there is a second-day effect as brokers make their pronouncement and then the third day as the institutions and the retail investors trade on the back of the results. It can be good to let the results wash through sometimes. No hurry to go against the crowd or be contrarian until the wave has passed. Missing the bottom is allowed. Getting on board a train heading in the right direction is a better outcome. Too many mixed metaphors perhaps?
The Calendar – Best Effort basis as some can change.
If you want to confirm a results date, go to the company website and if they have confirmed, it will be on their website.
One observation is that stocks that run into the results have tended to beat expectations, however failed to fire hard after results, but ones that surprised and had been laggards, had performed post-results far better. Not really a surprise to be fair.
Expectations have been low, and so far, they have mostly been exceeded although if you miss you do so at your peril. On the ASX, the breadth of analyst downgrades is negative 14% in July after a negative 20% in June.
You cannot escape all the surprises. It is the nature of investing that you will have risk. If you do not want any risk, then there are viable alternatives now with rates at elevated levels. Some surprises may come as pleasant, some not so. Unless you intend to sell everything before the season begins, you will suffer some slings and arrows. Focus on the horizon and try not to get caught up in the emotion of the moment. Computers will do their thing. No real investor can properly react that quickly to the news. The computers can get it wrong. Cool, calm heads and broker research after the knee jerk should help.
Expect the best, plan for the worse and prepare for the surprise. If you have done your research, and chosen well, August may prove to be more of an opportunity than a threat.
Let’s be careful out there.
Analysis as at 3 August 2023. This information has been provided by Marcus Today (AFSL is 473383), for WealthHub Securities Ltd ABN 83 089 718 249 AFSL No. 230704 (WealthHub Securities, we), a Market Participant under the ASIC Market Integrity Rules and a wholly owned subsidiary of National Australia Bank Limited ABN 12 004 044 937 AFSL 230686 (NAB). Whilst all reasonable care has been taken by WealthHub Securities in reviewing this material, this content does not represent the view or opinions of WealthHub Securities. Any statements as to past performance do not represent future performance. Any advice contained in the Information has been prepared by WealthHub Securities without taking into account your objectives, financial situation or needs. Before acting on any such advice, we recommend that you consider whether it is appropriate for your circumstances.