Wednesday, 19 February 2014

Reporting Season: Are you keeping up?

Every six months I write a post complaining about reporting season (that time of year when companies report their results to the market) - it's normally the time of year that I am the busiest and when my hard effort at the gym for the rest of the year gets undone.

But it is also the most interesting time of the year - it tends to be the time of the year when you get lots of new information on companies.  Why is this important?  Because when you invest in companies this new information can really move the valuation dial so you should really be keeping up.

A reminder from the past - don't make rash decisions

The danger with a whole heap of new information is you get out there and start trading on this information before you really process what it means and how relevant it actually is.  Decisions about trading never have to be made so take your time to absorb all the information.

But make sure you actually get the information

Even if you don't trade on
the information - make sure you actually get it.  For every company you are involved in you should (at a minimum) be reading the investor presentation, the results summary and listening in to the investor call and briefing.

This may sound like a lot of effort - it is the reason that I think as an investor you should really limit the number of stocks you own.  If you want a broader market exposure then go for index funds - they are really great for providing some diversity in your portfolio.

You should never invest in something you don't understand and keeping up with the companies you are invested in is very important!

A reminder to think about the stocks you already own BEFORE thinking about new investment ideas

If you are tossing up investing in a new stock but don't have time to listen and go through all the information for your existing stocks then I would go with your existing stocks and getting all the information that you can.  It has to do with where your money is invested - you are not losing actual money by missing out on an opportunity but you may miss some lazy capital that you have lying around in dud companies if you ignore them every time a result comes along.

Reporting season is also a great time to get out of (or into) stocks which are thinly traded.  Stocks that typically don't trade day to day will definitely trade on their report date as people think about that stock for the first time in months.  If you want to sell out of a stock that you have been holding because there is no volume being traded then reporting season is a great time to do it.

You May Also Be Interested In
Ahh reporting I've missed you
How to avoid making bad decisions during reporting season
How to get webcasts during reporting season
Controversial investment advice: only invest in what you understand


  1. I've actually stopped following reporting season. I've found that my new investment strategy this year has meant I don't really care about individual stock performances.

    The only real attention I'm paying now is the dividend announcements.

    1. I completely get why / how you can do that with a beta focussed portfolio (it really is one of the core attractions of a strategy like that). Unfortunately too many people take the same approach while holding a non diversified portfolio of individual stocks.

      I definitely recommend keeping up with reporting season if you're investing in and tracking individual stocks.