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QSQT- Quarter se quarter tak!

Printed From: The Equity Desk
Category: Market Strategies
Forum Name: Fundamental
Forum Discription: Discuss the operations and finances of any of your companies.Make the other participants aware on the investment opportunities available in a stock on PE free cash flow etc
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=418
Printed Date: 25/Apr/2017 at 10:01am


Topic: QSQT- Quarter se quarter tak!
Posted By: kulman
Subject: QSQT- Quarter se quarter tak!
Date Posted: 26/Sep/2006 at 8:29pm
With the forthcoming result season (2ndQ FY07-starting 1st week of Oct), the media will be buzzing with Quarterly Results, performance v/s expectations.....stocks will be beaten down due to falling below estimates..and all that usual drama.
 
In my view, punters take bets on expected results which makes the season highly volatile, giving opportunities sometimes when even some good stocks are beaten down too much.
 
I invite your views as investors whether & how should we look at company's performance QSQT (Quarter se quarter taq). Does it really deserve that much attention as media portrays?


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Life can only be understood backwards—but it must be lived forwards



Replies:
Posted By: omshivaya
Date Posted: 26/Sep/2006 at 9:09pm
To some extent, yes it is all good. As it keeps the companies on their toes and puts higher due diligence from the public, media on them. Checking something 4-times(quarterly) than 1 time in a year is always better.
 
About the hype and all, well...it cuts both ways! But one needs to "shut the noise out" and focus on "what oneself was expecting out of a company" and "what their company delivered" and not what an "analyst was expecting" and "what the company delivered".
 
 
Just my two cents! Me no experto pal!


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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it


Posted By: kulman
Date Posted: 26/Sep/2006 at 9:21pm
OmShivay jee
 
Namaskar! Nice to see you back in action after a hiatus. Thanks for your views.
 
By the way, could not understand your changing avatar into a "bear". Your own pic was nice. Just an observation, if you do not mind.


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Life can only be understood backwards—but it must be lived forwards


Posted By: omshivaya
Date Posted: 26/Sep/2006 at 9:50pm

Oooh yeahh! I am dashing  aint I? heee heee heee !

 
Jokes apart, I kept the "Bear" as it helps me remember something about the market whenever I post any message here: "The bear is around everytime and can pounce anytime so be alert"
 
It helps me keep my head on the ground and feet under them, not on the clouds!
 
 
Hope it's clear now


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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it


Posted By: Vivek Sukhani
Date Posted: 27/Sep/2006 at 10:02am
Good that you pinch yourself, Om. Although we may be sharing different perspectives yet I like watching your postswith intent. But, I agree with Kulman that you are no way like a bear.... that image suits a person like me who tries to find fault with everyone's idea.
 
Kulman, I beleive quarterlies are important if you are looking from the direction point of view.Trading on quarterlies may be dangerous though, yet sometimes they may be very profitable.As Om has said, remove the noise and you may come up with some excellent results. Also, reading quarterlies requires too much discipline. We dont getthe Balance Sheet details from our quarterlies and thats a major handicap. I can tell you, most of the managements can appear very aggressive as far asturnover is concerned but when it comes to generating cash, they arent as efficient. Most of the incremental sales finds it way in stocks and debtors which are riskier assets in my opinion.
 
In a nutshell, I admit the importance of qyarterlies and I am myself a quarterly buff.They give me re-assyrance when i am on track or send me warning signs...
 
Vivek


Posted By: omshivaya
Date Posted: 28/Sep/2006 at 1:12pm

Very nice brief Vivek. And fyi, I find it good for you to find "fault with others" at 1st sight as that leads to objectivity and clarity on the topic being discussed.



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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it


Posted By: Vivek Sukhani
Date Posted: 29/Sep/2006 at 2:48pm
When I first read QSQT, i thought it meant Qayamat se Qayamat Tak... now I realise it means something even more interesting...good topic...
 
Reagrds,
 
Vivek


Posted By: basant
Date Posted: 01/Oct/2006 at 11:17pm
Kulman Jee: It all depends on the investors perspective and the sectors he wants to be invested in if his money has been put in technology then he needs to hear each word of what is spoken from the Infy Campus at bangalore  and if he is with a stock called http://www.theequitydesk.com/forum/forum_posts.asp?TID=128 -


Posted By: kulman
Date Posted: 01/Oct/2006 at 10:01am
Basantjee
 
What shall I say?...an excellent measured response by you...as usual!


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Life can only be understood backwards—but it must be lived forwards


Posted By: Vivek Sukhani
Date Posted: 26/Oct/2006 at 9:29am
Hi,
 
This quarter's numbers have been very good and also very surprising...the biggest surprise came yesterday, when I saw Zee's results, Sical's results and shipping Corporation's results. Zee was such a disappointment. PAT was down inspite of Higher Other Income, Lower depreciation and lower Tax... Sical considered one of the biggest beneficiaries of Infrastricture boom, reported a dismal quarterly. And the best of all, considered a cyclical play, a laggard, a slow moving PSU, Shipping Corporation reported a stellar...
 
All this brings me to say.... either the quarterlies are non-sense which reveal as much or probaly less than what it conceals or The Market is getting hopelessly wrong. I hope the former is the case, because with this of sort of earnings, if companies like Zee or Sical come under any pressure, they may get help of anytng but financials and with people so very much invested in them, lets see what the market does.
 
I am equally perplexed in trying to locate the future and ignoring the present. If present is anything to go by, the future will be quite different from what the market is forecasting....but then we should remember an old adage:
You cannot change your past. But you can ruin your present by worrying unnecessarily about the future.
 
I can be blamed for being a value seeker but then waiting for value to emerge and ignoring value which the present has, is in my humble opinion, an invaluable mistake....
 
What do you say??????
 


Posted By: manishdave
Date Posted: 26/Oct/2006 at 10:20am
Originally posted by Vivek Sukhani

Hi,
 
This quarter's numbers have been very good and also very surprising...the biggest surprise came yesterday, when I saw Zee's results, Sical's results and shipping Corporation's results. Zee was such a disappointment. PAT was down inspite of Higher Other Income, Lower depreciation and lower Tax... Sical considered one of the biggest beneficiaries of Infrastricture boom, reported a dismal quarterly. And the best of all, considered a cyclical play, a laggard, a slow moving PSU, Shipping Corporation reported a stellar...
 
All this brings me to say.... either the quarterlies are non-sense which reveal as much or probaly less than what it conceals or The Market is getting hopelessly wrong. I hope the former is the case, because with this of sort of earnings, if companies like Zee or Sical come under any pressure, they may get help of anytng but financials and with people so very much invested in them, lets see what the market does.
 
I am equally perplexed in trying to locate the future and ignoring the present. If present is anything to go by, the future will be quite different from what the market is forecasting....but then we should remember an old adage:
You cannot change your past. But you can ruin your present by worrying unnecessarily about the future.
 
I can be blamed for being a value seeker but then waiting for value to emerge and ignoring value which the present has, is in my humble opinion, an invaluable mistake....
 
What do you say??????
 
 
Vivek,
In case of Sical I believe management is SPIC group. If that is the case I have puzzle challange for members.
Who is best of three? Videocon, Essar or SPIC group ?
Q are not non-sense. One has to use sense how to play that. I dont mean to say buy at 10 pm and sell at 10:30 with Q, but see the trend. If comapany in good industry performs poorly Q on Q, dump it. On the otherhand, sometimes you can find hidden jewel.
Let's say you are interested in cement industry, watch q reults of all cement companies. That helps you big time.


Posted By: Vivek Sukhani
Date Posted: 26/Oct/2006 at 10:39am
Good quiz question...we can have a poll on that...by the way even SPIC has also come out with a disappointing result. I agree wih you, Q are not non-sense, but then markets seem to make no sense of them. People are chasing value when thats lying on the plate. They are imagining the FY09 and FY2010 results when their expected EPS os available in the current fiscal. Thats the anomaly.
 
Amara rja has produced a stellar. No wonder its quoting above Exide and in no time with these sort of result it will command a higher P/E as well. So, its better to play a pure battery game rather than a mix of battery cum insurance as people are doing in exide.


Posted By: reema
Date Posted: 27/Oct/2006 at 5:25pm

Amarraja cannot be compared to Exide  See their track record.How is AMraja quoting above Exide? Please do not look at absolute stock prices in that case LMW is the best company in India?

Also market is never wrong  only they look to be wrong.


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You should try to add wealth not multiply it


Posted By: Mohan
Date Posted: 06/Mar/2007 at 4:55am
Very Soon Results season will be upon us.
Who will exceed expectations and who will not ???????????


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Be fearful when others are greedy and be greedy when others are fearful.


Posted By: kulman
Date Posted: 26/Jul/2007 at 10:08pm

The importance of a quarter

 

If you are an avid watcher of the business channels on television, you could not have missed the frenetic activity that accompanies the quarterly “earnings season” — the period when listed companies unveil their results for the latest quarter. In fact, the actual earnings announcement is often drowned by a veritable flood of analyst comments, Q&A sessions with the management and sound bytes from market players. All this is usually accompanied by sharp gyrations in the stock price of the company being discussed. Indeed, to find a stock battered by 5-10 per cent in a single day after ‘disappointing’ results is not an unusual occurrence.

 
Quarters as milestones

But if stock prices really capture a company’s earnings prospects over the next two-three years, why do results for a single quarter cause so much mayhem? Well, this exuberance is not entirely irrational. Here is why quarterly results influence stock prices.

Though the stock market typically values a company based on its estimated earnings over the next few years, the quarterly earnings announcements are milestones that help investors evaluate if a company is really on track to meet those expectations. Failure to meet the market’s expectations for a particular quarter naturally means higher targets for the rest of the year. Numbers that are better than what the majority of players in the market expected drive the stock prices up, as that may warrant an upward revision in the earnings expectations.

 
In fact, stock price gains for the Sensex companies over the past three years have been driven, to a large extent, by them repeatedly delivering earnings that are higher than analyst expectations.
 

Cues to future

Another reason why the earnings season is such an action-packed one for the stock markets is that they often provide cues to future earnings, from the company’s management. With disclosures improving, several companies use the earnings season to touch base with analysts and investors and update them on business developments.

 

Conference calls with analysts and the public appearances made by the company management, often give investors new insights about unfolding trends in the business as well as the outlook for it, over the next few quarters. The new information helps the stock market “reset” earnings expectations, triggering stock price moves.
 

Finally, the quarterly earnings season also helps to turn the spotlight on the earnings potential of the less-known mid-size and smaller companies. Remember; there is still a large cross-section of small and mid-cap stocks that are not yet tracked by an army of analysts. Stock prices for such under-researched stocks are often not shaped by formal “earnings estimates” or “consensus expectations” as in the case of the high profile companies.

 
Under the circumstances, the quarterly earnings announcement often serves as the only reference point for investors looking to evaluate such stocks. This is why the quarterly earnings season is often marked by frenetic activity in the mid-cap and small-cap space, with sharp jumps in stock prices shortly after a company’s results announcement. For some of the low-profile members of India Inc, the earnings season is the time to bask in a few moments of glory, fleeting though the stock markets’ attentions may be.
 
Source: http://www.thehindubusinessline.com/iw/2007/07/15/stories/2007071550701300.htm - HBL article here
 
 


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Life can only be understood backwards—but it must be lived forwards


Posted By: kulman
Date Posted: 02/Aug/2007 at 9:41am
SEBI against companies giving quarterly guidance
 
The Chairman of the Securities Exchange Board of India (SEBI), Mr M. Damodaran, today asked Indian industry to ponder over whether it was proper to give quarterly guidance “that to my mind is no different than forward-looking statements that regulations do not contemplate.”

Speaking at the National Conclave of the CII, Mr Damodaran said that some companies did that either because of “television audiences or because of analyst pressure.”

“You (already) have a problem of quarterly results being put out that puts extraordinary pressure on company managements to focus on numbers than how to take businesses forward,” Mr Damodaran said.

Because of this pressure, some companies indulge in “financial engineering,” he added.

Stocks in syllabus

The SEBI has succeeded in persuading the Ministry of Human Resources Development that it is not bad to put stock market related education in school syllabus, Mr Damodaran said.Clap

He added: “If you can vote for your representative at the age of 18, there is no harm in knowing what the stock market is all about. Till now it was resisted on the ground that young minds should not be “corrupted” by knowledge of stock markets.”

He also mentioned that the proposed setting up of National Institute of Securities Market, near Mumbai, would happen in a month.

Source: http://www.thehindubusinessline.com/2007/08/03/stories/2007080351691000.htm - HBL news here

 
 


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Life can only be understood backwards—but it must be lived forwards


Posted By: tigershark
Date Posted: 03/Aug/2007 at 5:06pm
Network - 18-- have TEDS REALISED  how one qrts indifferent results have put  SEEDS OF DOUBTS in many of our minds.ARE WE ONE QRT INVESTORS OR ARE WE LONG TERM INVESTORS introspection into each ones self is reqiured at this moment

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understanding both the power of compound return and the difficulty getting it is the heart and soul of understanding a lot of things


Posted By: basant
Date Posted: 03/Aug/2007 at 5:11pm
Golden words.Remember a friend of mine who keeps saying that investing is 50% skill and 50% emotion problem is when a quarter's results are bad we are compelled to look at our skill through emotion.


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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: kulman
Date Posted: 03/Aug/2007 at 5:21pm
...problem is when a quarter's results are bad we are compelled to look at our skill through emotion.
 
-----------------------------------------------------------------
 
It's not only a bad Qtr, but the emotions are somehow proportional to the Market Price and also attached to our own buying price (called as Anchoring in behavioral finance).
 
In this process we often tend to forget the 'big picture' or the future earning potential of that business.
 
 


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Life can only be understood backwards—but it must be lived forwards


Posted By: catchsudipto
Date Posted: 03/Aug/2007 at 5:22pm
have TEDS REALISED  how one qrts indifferent results have put  SEEDS OF DOUBTS in many of our minds.ARE WE ONE QRT INVESTORS OR ARE WE LONG TERM INVESTORS introspection into each ones self is reqiured at this moment
--------------------------------------------------
 
Boss i believe its one of the best words to diff b/n long term and short term investor. Great Job. Keep it upThumbs%20Up


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Make your Life as simple as possible.


Posted By: tyler_durden
Date Posted: 03/Aug/2007 at 5:29pm
Originally posted by kulman

...problem is when a quarter's results are bad we are compelled to look at our skill through emotion.
 
-----------------------------------------------------------------
 
In this process we often tend to forget the 'big picture' or the future earning potential of that business.
 
 
 
Thats wat happens most of the time...people follow herd mentality...people will start selling now...and will try to jump in when prices will start to soar .... totally opposite of buy cheap sell dear


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If you aren't fired with enthusiasm, you will be fired with enthusiasm.


Posted By: basant
Date Posted: 03/Aug/2007 at 5:42pm
Remember how we used to debate about Pantaloon's valuation when it was at Rs 400 - margins, Reliance, rent etc. At Rs 530 we have forgotten all of that.Wink

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: deepinsight
Date Posted: 03/Aug/2007 at 7:08pm
TV18/NW18:
While earnings were dissapointing - topline was actually quite encouraging. These kind of business models have a long enduring cash generating ability and growth trajectory in front of them. 
 
On a broader sense: Negative QOQ trends can actually give warning for detoriating businesses or business models - and can be invaluable decision tools to protect capital or add to a position if one percieves it as short term in nature.
 
It could be interesting to focus on what variables to focus onon QOQ basis for that particular business to monitor -for value creation and risks.
 
This quarter results has quite clearly underlined the detoriating external conditions for exporters (IT services companies, Pharma, Gems, Garments) because of the rising Rupee against the USD.  Now some companies are handling this challange better than others - but some companies may not be able to cope with this new challange.
 
Every quarter (even for many of us who are long term investors)  one has to take the numbers and decide - to sell, do nothing or buy more - we hope that usually the outcome is do nothing or add more.
 


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"Investing is simple, but not easy." - Warren Buffet


Posted By: kulman
Date Posted: 03/Aug/2007 at 7:19pm
Great points deepinsight.
 
Another major issue is understanding the difference between company's financial performance & its stock price performance on the bourses. Though these two (stock price & earnings) have corelation over a long term, there are numerous other factors which affect the stock price in the short-to-medium term.
 
Human mind gets swayed by stock ticker prices more than anything else.
 
 
 


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Life can only be understood backwards—but it must be lived forwards


Posted By: basant
Date Posted: 03/Aug/2007 at 8:13pm
Originally posted by deepinsight

TV18/NW18:
While earnings were dissapointing - topline was actually quite encouraging. These kind of business models have a long enduring cash generating ability and growth trajectory in front of them. 
 
On a broader sense: Negative QOQ trends can actually give warning for detoriating businesses or business models - and can be invaluable decision tools to protect capital or add to a position if one percieves it as short term in nature.
 
It could be interesting to focus on what variables to focus onon QOQ basis for that particular business to monitor -for value creation and risks.
 
This quarter results has quite clearly underlined the detoriating external conditions for exporters (IT services companies, Pharma, Gems, Garments) because of the rising Rupee against the USD.  Now some companies are handling this challange better than others - but some companies may not be able to cope with this new challange.
 
Every quarter (even for many of us who are long term investors)  one has to take the numbers and decide - to sell, do nothing or buy more - we hope that usually the outcome is do nothing or add more.
 
 
The problem in Tv18's results is more of comparision then performance:
 
1) This quarter the company consolidated Awaaz's profits which is almost double of the reported figures in the last quarter of the previous year with AWAAZ. See the recast income statement in the link below.
 
2) WEB18 showed a loss which was in profit in the corresponding quarter of the previous year.
 
3) If this was not enough NEwswire 18 also shoed a loss as this is a new business and needs scaling up. Though growth in NW18 was 70% from Q4 of Fy07 it did pull the profits down.
 
4) Revenues were up from 44% to more then 100% in the different business verticals.
 
5) Now problems as in points (2) and (3) will not be reflected in Fy 09 because these divisions would have come into profits.
 
See this link:
http://www.tv18online.com/investorupdateQ1_2007.doc - http://www.tv18online.com/investorupdateQ1_2007.doc
 
http://www.tv18online.com/investorupdateQ1_2007.doc -  


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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: kulman
Date Posted: 05/Aug/2007 at 8:50am

Welcome to the Academy Awards for the June 2007 quarter where we celebrate the best and the most different!

Very interesting http://www.business-standard.com/general/storypage.php?&autono=293414 - article here ....titled "And the Oscar goes to..."
 
Source: http://www.business-standard.com/general/storypage.php?&autono=293414 - BS Online
 
 


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Life can only be understood backwards—but it must be lived forwards


Posted By: basant
Date Posted: 05/Aug/2007 at 9:04am
This guy writes very well have met him once also. Was a very frequent writer in ET during the 90's and all his articles made tremendous sense. Prepares and designs annual reports right now spart from writing articles and occassionally popping out from the Idiot box.

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: Vivek Sukhani
Date Posted: 05/Aug/2007 at 9:15am
Even I met him onc e....he was extremely bullish on amara raja vis-a-vis exide at that time. I think he used to be a sports journlist as well, if I am getting him correctly...


Posted By: Vivek Sukhani
Date Posted: 05/Aug/2007 at 9:38am
Some of the companies are quite interesting....I know of seshasayee....this company has made a big turnaround sort of with the commissioning of power plant....I remember I had a talk with one of the fund manager i know and he said BILT is better than seshasayee and although I am quite impressed with gautam thapar's performanec as MD in other companies but the overhang of FFCB conversion price at less than book value is something I am unable to digest with ballarpur. And we had a very decent debate on seshasayee vs. ballarpur. both are lovely stocks and ballarpur has stolen some thunder by coming up with this scheme of rearrangement although on an absolute basis I have managed to beatballarpur with seshasayee. india Foils is a true mungeri case....I remember when i sold India fouils some time back @ 22-23, the very next day there was a news item in ET that there was  a big hunt for this company and there are at least 25 suitors. I even rememeber some people looking at its annual report and comparing it with Hindalco's and coming with a swap ratio. Some even had the imagination to say that it will first be amalgamated with Indal and subsequently that will be merged with hindalco. Naveen Fluorine has always been a decent bet....a big winner of carbon credits....Suzlon never inpired any confidence to me and the results come as no surprise....Shree renuka was surprising but i will rather like to go with an eid parry's at  108-110 levels...


Posted By: Mohan
Date Posted: 05/Aug/2007 at 10:37am
Originally posted by basant

This guy writes very well have met him once also. Was a very frequent writer in ET during the 90's and all his articles made tremendous sense. Prepares and designs annual reports right now spart from writing articles and occassionally popping out from the Idiot box.


Basantji,
 I remember reading him the 90's too. He is a talented writer.
Kulmanji ki tarah, he has a very unique style.


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Be fearful when others are greedy and be greedy when others are fearful.


Posted By: kulman
Date Posted: 18/Sep/2007 at 5:31pm

http://economictimes.indiatimes.com/Quarterly_earnings_guidance_-_good_or_bad/articleshow/2378693.cms - Quarterly earnings guidance - good or bad?

Earnings guidance are forward-looking statements provided by a company’s management to the public on what it expects the company will do in the future.

The three most significant benefits of earnings guidance include satisfying requests from investors and analysts; maintaining a channel of communication with investors and intensifying management’s focus on achieving financial targets.

However, it appears that short-term earnings guidance has resulted in short-termism, with cost outweighing the benefits. This is accentuated by a recent survey of 400 financial executives, in which 80% indicated that they would decrease discretionary spending on areas such as R&D, advertising and hiring to meet short-term targets and more than 50% said that they would delay new projects even if that meant sacrificing value creation.
In corporations, these costs are manifest in the practice of deferring investments and liquidating assets to enhance reported quarterly earnings per share.


The insights of the panel confirmed what the academic research suggests: namely, that the obsession with short-term results leads to the unintended consequences of destroying long-term value, decreasing market efficiency, reducing investment returns and impeding efforts to strengthen corporate governance. Other than leading to short-termism and huge pressure, companies are discouraged from providing earnings guidance because of threat of litigation and loss of reputation.

Warren Buffet encouraged management teams to place their attention and focus on long-term strategy, not quarterly earnings.
 
 Subsequently, companies representing significant Berkshire holdings, including Coca-Cola, Gillette and The Washington Post Company, ceased providing quarterly earnings guidance and instead opted for annual guidance. More recently, Intel, Citigroup, McDonalds, Motorola and Pfizer stopped providing quarterly earnings guidance.

This is aptly rounded off by John C Bogle, founder and former CEO of The Vanguard, that “the role of management should not be beating abstract numeric estimates, but improving the operations and long-term prospects of organisations.”
A blanket ban on forward looking statements and earning projections would be detrimental to the interest of shareholders. Certainly, care needs to be taken that companies do not issue excessively optimistic growth targets or deliberately lower expectations so that they can beat the target later.


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Life can only be understood backwards—but it must be lived forwards


Posted By: kulman
Date Posted: 05/Jan/2008 at 7:52pm
It’s the earnings season again. Brokerages have started sending their December quarter “earnings preview” to clients. 
 
...that hasn’t prevented analysts from going with the flow, bringing out still more glowing reports or finding “embedded value” in the stock. Rare is the analyst who has swam against the tide.
 
How impartial are analyst recommendations? In a National Bureau of Economic Research (NBER) paper written last year, titled, Do Security Analysts Speak in Two Tongues?, Ulrike Malmendier of the University of California at Berkeley and Devin Shanthikumar of Harvard Business School set out to study why security analysts issue overly positive recommendations.
 
To the sceptical layman, there seems to be a straightforward answer—analysts are paid to encourage clients to buy stocks, simply because the universe of potential buyers is always larger than the universe of potential sellers.
 
The researchers found analyst reports had very different impacts on small investors, on the one hand, and large institutional investors, on the other. Small investors were seen to react to simple “buy” or “sell,” often ignoring the subtext in a “hold” recommendation, which may actually be a euphemism for “sell.”
 
The more sophisticated institutional investors were, however, clearly able to act on such recommendations. That is why, said the researchers, “analysts can speak in two tongues, targeting the more sophisticated investors with the earnings forecasts, and the less sophisticated ones with the recommendations.” Here’s what
 
To cut a long story short, researchers found plenty of bias in analysts affiliated with investment bankers. That’s hardly surprising, particularly in the wake of the revelations about how analysts conned their clients during the dot-com boom, knowing fully well their recommendations were worthless.
 
Another NBER paper by Narasimhan Jegadeesh and Woojin Kim, titled Do Analysts Herd? An Analysis of Recommendations and Market Reactions, says that recommendation revisions are “partly driven by analysts’ desire to herd with the crowd.” They found stronger herding instincts for downgrade, which suggests analysts are more reluctant to stand out when they convey negative information.
 
And in these euphoric times, investors would do well to remember this conclusion: “There is evidence of a pre-disposition amongst all analysts to recommend glamour stocks with positive price momentum.”
 
Link: http://www.livemint.com/2008/01/04211547/IN-EARNING-SEASON-DOES-ANALYS.html?atype=tp - here
 
 


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Life can only be understood backwards—but it must be lived forwards


Posted By: kulman
Date Posted: 20/Feb/2008 at 11:41am
http://economictimes.indiatimes.com/Markets/News__Views/Analysis/Understanding_results_could_get_more_complex_for_investors/articleshow/2799653.cms -


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Life can only be understood backwards—but it must be lived forwards


Posted By: kulman
Date Posted: 19/Jul/2008 at 11:37am
Interesting brief write up on dopamine & neuroeconomics...

http://www.thehindubusinessline.com/iw/2008/07/20/stories/2008072050901300.htm - Why birthdays are depressing

The post is made on this thread too for the obvious reference to overreactions from market participants to quarterly results.




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Life can only be understood backwards—but it must be lived forwards



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