The Benefit of Trading Stocks Post-Earnings
While many amateur investors play ‘earnings roulette’, savvy investors understand that waiting until after an earnings report can often be more powerful. Below are three reasons why:
· You avoid binary event risk: Corporate earnings are notoriously hard to predict. Additionally, even if earnings were highly predictable, the reaction to these earnings isn’t. By waiting until after earnings, investors can eliminate binary, ‘coin flip risk.’
· Forward guidance clarity: Investors can get a clear view of earnings and forward guidance before risking their hard-earned capital.
· Post-earnings drift: When a company reports a bullish earnings report, price tends to continue to drift higher after the initial burst as institutional investors jockey to get positioned.
Amazon: A Post-Earnings Drift Set Up
Until its earnings report last week, Zacks…
