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A Time For Focus on What Is Important
For share investors or business owners “Reporting Season” is the grand final of the football season or the Ashes series for cricket fans. It is where the companies report to shareholders about the underlying performance and ultimately profitability of their businesses. Investors trade shares pretty much all year round and a whole raft of factors influence markets from economic issues, natural disasters, acts of terrorism of implied threats of combat the list is pretty much endless. However, these few weeks provide a window to really focus on what we are trying to do in the long term....own a profitable business.
In the words of the famous money manager Peter Lynch, “I spend about fifteen minutes a year on economic analysis. I also spend fifteen minutes a year on where the stock market is going”.
As the US gets towards the end of their “Reporting Season” it is just starting in Australia. In the US at this stage more than 350 companies that are in the S&P 500 have reported earnings with about 75% of these beating expectations. How are the underlying businesses you own performing in terms of profitability, operationally and the future strategy they are implementing. This is the gauge of whether we want to be investing in a business not the share price, the share price just tells us whether a business is cheap or expensive.
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