Jan. 21 at 10:46 PM
🌨️As we navigate a busy earnings week, here is harsh reality: positive earnings ≠ positive price moves
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$MMM: Beat profit but fell 7% on a glum forecast.
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$STT: Dropped 6.1% as a dim outlook overshadowed the beat
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$NFLX: Slid ~6% on disappointing forward guidance.
Data backs it up. Stocks beating estimates are actually trailing the S&P 500 by 1.1% (the worst relative performance since 2017). See screenshot from Bloomberg.
Why? Valuations are rich (22x forward earnings) and the market is punishing weak guidance regardless of the beat. (Note: Still early days as only 9% of the companies of SPX market cap reported!)
My play:
➡️ Sit out the earnings print.
➡️ If there is an abnormal move down but you believe the fundamental thesis is intact that is the moment to get in.
