Stock investment before and after the announcement of financial results. 4 precautions to avoid turbulent defeat

・ “That time” that bothers individual investors has arrived.
・ Caution 1 Stock price movements after the announcement of financial results cannot be predicted in advance.
・ Caution 2 Do not buy as much as possible immediately before the announcement of financial results.
・ Caution 3 Immediately before the announcement of financial results. Attention to the rise in stock price
・ Caution 4 Do not go against the movement of stock price after the announcement of financial results

From the latter half of April, companies that settle in March will enter the season for announcing their financial results. Many individual investors should be troubled by the volatility of stock prices during this period. So, here are four points to keep in mind in order to survive the financial results announcement season.

“That time” has arrived that bothers individual investors

Speaking of financial results announcements, it is the “fluctuation of stock prices after the announcement of financial results” that worries individual investors. The author himself feels depressed this season once every three months.
This is because it is not uncommon for stock prices, which have been favorable, to plummet due to the announcement of financial results.

However, when investing in stocks, it is inevitable that the stock price will be disturbed during the financial results announcement season. So, here are four points to keep in mind as you survive the financial results announcement season. Please refer to it.

Attention 1. Stock price movements after the announcement of financial results cannot be predicted in advance

The financial results announcement season is difficult because it is not possible to predict in advance how the stock price will move after the financial results are announced. Stock prices can plummet even with good financial results, and conversely, stock prices can skyrocket even with poor financial results.

However, the details of financial results can be detected in advance to some extent by professional investors who have excellent information and analytical skills. The resulting investment behavior of professional investors appears in stock price trends.

For example, if a stock has been on a downtrend since before the announcement of financial results, the financial results are often not good. On the other hand, stocks that have been on an upward trend since before the announcement of financial results often have good financial results.

Therefore, the author will continue to hold stocks that are on an upward trend before the announcement of financial results without selling them before the announcement of financial results.
For some stocks that are about to announce their financial results due to an upward trend, their stock prices will plummet after the announcement of financial results, but we have
no choice but to give up.

There is also a strategy to sell the shares held before the announcement of financial results. That way, you won’t get caught up in stock price volatility after the announcement of financial results.
However, if the stock price soars due to the announcement of financial results after the sale, you will not be able to benefit from it. There is also a risk of catching a high price, so there is a risk of repurchasing.

There  are advantages and disadvantages to either continuing to hold shares across the announcement of financial results or selling them before the announcement of financial results . The author thinks that the risk of missing a sharp rise after the announcement of financial results should be avoided rather than the risk of a sharp drop after the announcement of financial results, and stocks with an upward trend will continue to hold stocks across the announcement of financial results.

Attention 2. Do not buy as much as possible just before the announcement of financial results

Even if a stock that had been on an upward trend before the announcement of financial results plummeted due to the announcement of financial results, it often does not become a big negative. There are many cases where you can sell out with a plus.

This is because if you buy at a time shortly after the uptrend, the stock price just before the announcement of financial results is often much higher than the stock price at the time of purchase.
Even if the stock price plummets from there, it is unlikely that it will fall significantly below the stock price at the time of purchase.

However, if you buy stocks just before the announcement of financial results and the stock price plummets due to the announcement of financial results, the price will drop significantly from the price you bought.

For example, if a stock bought for 3,000 yen rises to 4,000 yen and the stock price plummets to 3,200 yen due to the announcement of financial results, you can sell it for an additional 200 yen.

However, if you buy for 4,000 yen just before the announcement of financial results and get caught up in the plunge after the announcement of financial results, you will end up selling for 3,200 yen, which is -20%.

The movement of stock prices after the announcement of financial results is unpredictable. Please be aware that buying stock just before the announcement of financial results is quite risky.

 

Attention 3. Beware of stock price increases just before the announcement of financial results

Stock prices, which had been declining, suddenly rose shortly before the announcement of financial results, often crossing the 25-day moving average. However, be aware that this is often only a temporary rebound.

Not only investors who buy and hold stocks, but also those who are short-selling the stocks
do not want to be involved in the volatility of financial results announcements . If the financial results of short-selling stocks are unexpectedly good, the stock price will skyrocket. Investors short-selling the stock can lead to huge losses.

Just as an investor who owns a stock wants to sell his stock before the announcement of financial results, an investor who sells short wants to buy back the short sale before the announcement of financial results.
As a result, stocks that continue to be on a downtrend often rebound just before the announcement of financial results due to short-selling buybacks.

The other day, the stock that had been on a downtrend exceeded the moving average on the 25th for the first time in a while, so when I bought a new one, it was announced that the financial results would be worse than expected immediately after that, and I was worried about the stock price plunging. I did.

If you suddenly exceed the 25th moving average just before the announcement of financial results, you should buy only a small amount and decide the action after seeing the reaction of the stock price after the announcement of financial results. think.

Attention 4. Do not go against the movement of stock prices after the announcement of financial results

Even if the financial results are far better than the earnings forecasts in the company’s quarterly report, the stock price may drop significantly. On the contrary, the stock price may rise significantly even if the financial results are worse than the earnings forecast of the company quarterly report.
This is due to the difference between the forecasts of professional and foreign investors and the forecasts of the company quarterly report.

The reaction of the stock price due to the announcement of financial results is not brought about by comparing the forecast of the company quarterly report with the actual financial results, but by the comparison between the forecast of professional investors and the actual financial results.

We individual investors cannot know the expectations of professional investors. But you can tell whether the stock price went up or down due to the announcement of financial results.
At this time, I would like to be careful when the stock price drops
sharply even though the financial results are announced far better than the company’s quarterly report forecasts .

Individual investors compare the company’s quarterly report with the financial results. Therefore, I am happy to buy the stock whose price has dropped, saying, “I will buy it because the stock price is falling even though it is such a good performance!”
However, from the perspective of a professional investor, if the financial results are not better than the professional’s own forecast, it is natural that the stock price will be sold.

Therefore, even if the content of the financial results announcement is better than the forecast of the company quarterly report, let’s not let go and buy it happily. Regardless of the content of the earnings announcement, if the stock price falls sharply after the earnings announcement, it is important to wait untouched until it returns to the uptrend.

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