It’s earnings season. Think: when you had to come clean about your grades and ask your parents to sign your report card, but for public companies. It’s when everyone from GM to Netflix and Tesla tells investors how much money they’ve made in the last quarter. Here’s what this means for your wallet.
You might get a hint of what the stock market will do next. Some fan fav companies are called ‘bellwethers’ or trendsetters. Like your fashionable friend who wore biker shorts first. A positive earnings report from a bellwether, like Microsoft or Apple, could signal smooth sailing for stocks. If bellwethers' earnings are disappointing, things could get bumpy. Psst...take these hints with a grain of salt. No one actually knows what the market’s going to do next.
You might get some inspiration for your holiday wish list. Some companies try the whole ‘sandwiching bad news between good news’ distraction technique when they have less-than-exciting earnings to share. To soften the blow, they’ll announce a major new product or store opening.
Your investments could go up. Or down. If investors are happy with a company’s finances, its stock price might go up. If not, it could drop. Reasonable. Especially if you own individual stocks, a particularly good or bad earnings report can have a big impact on how much money you gain or lose. Just remember that investing is a long game. Don’t let short-term jumps freak you out.
theSkimm: Companies’ earnings reports can move the market today and set the mood for what’s to come. It’s a good reminder of why it’s important not to put all your eggs in one basket. If your investments are diversified with a mix of stocks across different sectors and even countries, your money should be protected from big market swings. Which is the whole point.