The great game begins

Today is officially the first day of earning season. The earning season decides the fate of many companies. In spite of hundreds of analyst trying to predict earnings, there are always surprises and disappointments. There are winners and losers. Investor try and get a feel for future earnings and industry trends based on conference calls, future guidance and actual earnings and sales number.

These anomalies and gaps between market perception creates opportunities. Some of these opportunities are momentary lasting few hours, few days and then there are long term opportunities which last months, and years.

Large sums of money gets invested by mutual funds and other long term investors during this time. This dynamics creates certain kind of event specific opportunities. The conventional wisdom is it is a risky time and many advise staying away from the period. Well when risk is high, rewards are high.

As a general rule I try and not miss a single earning season.

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