Earnings ahead: A good time to pick stocks for your portfolio

Moomoo Learn joined discussion · Jan 19, 2023 11:33

What to expect

Here are the notable earnings for the rest of the week. After mixed earnings of bank sectors, which reflected the impact of the sluggish macro environment on their investment banking business, the market will keep an eye on the tech earnings led by $Netflix (NFLX.US)$ on Thursday after the bell.

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Analyst Opinions

Traders expect the turmoil that roiled markets last year to ease due to the cooling down inflation and potential slower support for rate hikes. Besides, the Bloomberg data showed that there have only been two back-to-back annual stock market declines since 1950— during the recession of the early 1970s and after the dot-com bust.

Earnings ahead: A good time to pick stocks for your portfolio

Still, it's worth noting that Wall Street's fear gauge has fallen to its lowest level in months, with some analysts suggesting the rally may be nearing its end. When investors tend to be complacent, unexpected shocks can panic investors and trigger greater volatility.

How to make earnings season work in your favor

Predicting the market is difficult, and so are earnings reports.

Why?

It’s impossible for ordinary investors to obtain all the information and make a perfect strategy. We also don't know how other investors in the market will react to the same earnings report.

To complicate matters further, it's not just actual results that can boost or drag stock prices. Overall market conditions and sentiment can also affect stock price performance after a report.

However, opportunities and risks arise when perceptions diverge. For most investors, the solution may be

1) Diversify your portfolio

2) Do not use leverage tools

3) Don't short or buy companies you don't understand

4) Last but not least: Pick good stocks to watch and wait for better entry points. While picking good stocks to buy and hold is a common strategy, buying at a reasonable price can make your investment more secure and easier to stick with.

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