How Earnings Season Can Affect Your Wallet

Published on: Oct 14, 2021fb-roundtwitter-roundemail-round
Earnings Season Report CardDesign: ML Howell, Credit: iStock

Earnings season on Wall Street: like 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 to big banks like JPMorgan Chase and Wells Fargo tells investors how much money they’ve made in the last quarter. And data suggests that, over the past 20 years, Q3 reports have been big market movers, as businesses get investors excited by sharing plans for the new year.

The deets that matter for your wallet: Some say earnings season could hint at what the stock market will do next. Some fan fave 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 a certain industry. If bellwethers' earnings are disappointing, things could get bumpy.

Your move: Sometimes, the right money move is...not to make a move. But here's what to do if earnings season has you thinking about your own portfolio.

  • Hold steady. Take any market hints you think you get from earnings season with a grain of salt. No one actually knows what the market’s going to do next. Your investments could be heading up. Or they might go down instead. Remember that investing for big goals like retirement is a long game. Don’t let any short-term jumps freak you out.

  • Review your asset allocation. It's a good idea to look at your investment portfolio every once in a while to see if it matches your goals and risk tolerance. And to make sure you aren’t overinvested in any one stock or industry. Diversification is an important part of smart investing.

theSkimm: Earnings reports can move the market today and set the mood for what’s to come. It’s also a good reminder of why it’s important not to put all your (financial) 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.

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Skimm'd by: Casey Bond, Ivana Pino, Stacy Rapacon, and Elyse Steinhaus