18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
19,327 Blog Posts

Always Be Nervous Heading into Earnings

The only reason why I’m not crying this morning, following the SONO earnings miss, is because I sold half the position yesterday for a 9% gain. I got lucky, plainly — due to my memory of getting fried inside the pan during earnings season. It was an easy sell, since the stock had pressed higher by 13% for the day. Whenever a stock barrels higher like that ahead of earnings, more often than not the stock is going to drop after earnings. That’s just the way it goes.

With the balance of my position, I will likely sell it today and be done with it — because holding a stock diving lower after earnings is the definition of dead money.

Futures are appreciably lower, but there isn’t much to worry about. I still have 25% cash and two old man stocks, K and CLX, which can soften the blow of any market about to get poleaxed. I haven’t had a good poleaxing in a long time. Perhaps now is as good a time as any — whilst in the month of September and all.

I have a lot of lessons to teach you — and the most basic one is easy to understand: ALWAYS BE NERVOUS heading into earnings. Nothing is set in stone and even if you had inside info on a company — there’s no way of knowing how Wall Street is going to digest said news. If you have easy profits like I did with SONO yesterday, 9 times out of 10 take it.

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