Earning Runs Explained
“Earning runs refer to the reports of earning seasons that happen in the market.”
Almost everybody has heard of ‘Earnings Runs’ but it’s a common experience that proper understanding of this term is very uncommon. Let’s try to make it common.Most traders are constantly in the look out for Earnings Runs so that they can fill their accounts with a hefty amount of bucks. Basically, earning runs refer to the reports of earning seasons that happen in the market.
Traders, who especially invest in stocks, are so hopeful of these earning runs that massive buying leads to an increase in the prices of stocks even before the actual earnings are to materialize.
The catch here is that news about these earning seasons is based on the preceding quarter. So, there is every possibility that a small crackdown in the market may ensue before the ‘actual earnings’.
It is because a majority of people is in fact wary of such reports and public in large is not much impressed by the increase in the prices of stocks that is a result of the buying activity of the traders only. To put is simply, the credibility of such news is at a very low.
This attitude of public is to a great extent logical if not 100% correct. It is advised that you should not hold stocks over the ‘Earning Runs’ especially if you are a small time player.
It is quite likely that you may miss a bonanza as far as the profits go but it is sure that you would never be cheated by these reports if you just take them as a reference rather than follow them blindly.
If we go by statistics more than 70% of the stocks function contrary to their respective Earning Runs. Is such a big risk to be taken when you don’t have surplus money and are counting on what you have already put in the market?
There always are some people who would persuade you to go by these earning runs with adages like ‘No Risk No Profit’. But mind you either these people are complete cynics or they want you to do it because the have also done the same thing (secretly though). So, use your intellect coupled with commonsense and act accordingly.
Author - DeeKay
This article was created by DailyOjo staff. Report Spam/Abuse