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14 Feb 2017 (AFR) – Sell and keep selling for five months when a stock disappoints

[COMMENT: There are many points of view (ie. different opinions) about holding shares as the share price falls, or selling, protecting capital by selling, or hoping for the best by holding. This news story throws an interesting light on this topic.]

(14 February 2017, AFR, p26, by Philip Baker)

‘Patience pays off for investors when reporting season disappoints.’

‘One of the standout features of the past few reporting seasons has been how large some of the moves have been in a stock, both up and down, on the day a company reports earnings. It’s early days this time around but the same signs are showing up again.’ <snipped…>

‘Analysis by The Coppo Report shows that in the previous reporting season 46 per cent of stocks went up on the day of reporting by an average of 4.97 per cent, while 49 per cent of stocks fell by an average of 5.5 per cent on day one. Three per cent of stocks were unchanged. Of those stocks that fell on the day of reporting, most of them kept on falling. Indeed, six weeks after reporting 128 of the 155 stocks that dropped were still down and it wasn’t much better five months down the track when 111 of those companies were still trading in negative territory. Bottom line, when a stock falls on the day of reporting, don’t go near it for at least five months.’ <snipped…>

‘According to The Coppo Report of the 144 stocks that headed higher on the day of reporting last August just over 100, or 71 per cent, were still higher five weeks later. Five months on and just 74 stocks…’  <snipped…>

Reporting season can also be make or break time for the short sellers. Short selling has been one of the most successful strategies for hedge funds…’

Read more at AFR.com (might need AFR login access, or try: AFR.com/trial)

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About robertbrain

Brainy's Share Market Toolbox. Read the honest truth about the sharemarket. Develop or fine tune your investing/trading strategies using share price charts (technical analysis), or learn about the investment strategies of others. Melbourne (Australia) based - supporting share market investors and traders to build wealth through smarter investing using my Share Market Toolbox arsenal of weapons to tackle the market.

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