Hirschhorn: Earnings Schmernings

(Video: Market coach Doug Hirschhorn, PhD, discusses why earnings don't mean as much as we think they do.)

We're smack dab in the middle of earnings season. Many investors get hung up on earnings -- they spend way too much time thinking about what the numbers really mean. But here are four good reasons why, if you're a typical investor, you might want to re-think an investment strategy based on earnings data.

  1. You snooze, you lose If you're waiting to find out the earnings before you make an investment in a company, you're already too late the party.
  2. Listen to what the market is saying by watching what it's DO-ing Successful trading is about watching the price action and reacting to it. It's far less about trying to outsmart the markets.
  3. TMI (Too Much Information) Earnings season is exciting to watch and fun to talk about, but so what? It just creates more confusion than clarity. My Advice: Pick a few companies in play and focus on them rather than spreading yourself too thin.
  4. Mix it up a bit Here’s a news flash: Just because you have always traded US equities does not mean you should only trade them. In reality, there are lots of different ways to make lots of money, like metals, oil and currencies.

Sometimes as a trader, the less comfortable you feel about a product, the more objective your decisions are. My advice, for Q4? Think outside the box.

Think better, invest smarter.


Doug Hirschhorn is the chief executive officer of Edge Consulting, a firm specializing in “Peak Performance Coaching.” He holds a Ph.D. in Psychology with a specialization in sport psychology, and has offices in New York and South Florida. His client list includes elite athletes as well as many of the largest banks, hedge funds and financial institutions in the world. Doug is presently at work on his new book, 8 Ways to Great (Putnam, 2010).

Have a question for Doug? You can reach him through his Web site, DrDoug.com

Disclaimer: Doug Hirschhorn's expertise is in the psychology of achieving peak performance. He is not a financial advisor and does not make trading or investment recommendations or provide trading or investment advice. He is an expert on the mental game. Although Doug Hirschhorn has a Ph.D. in Psychology with a specialization in sport psychology, he is not a licensed psychologist and does not provide therapeutic, clinical or counseling services.