It's a big week on the earnings front with a slew of financials, healthcare and tech companies reporting.
IBM and Texas Instruments lead the pack on Monday, along with other bellwether companies such as Apple and Johnson & Johnson . It is turning out to be quite a performance from the corporate sector with this quarterly earnings cycle likely to exceed analysts' expectations. (Track your earnings season here.)
But what does that really mean and does it really matter?
The importance of headline numbers and earnings reports all comes down to your investment time horizon. While companies may exceed analyst earnings expectations on a quarterly basis or even year after year, it's only meaningful in the short term if you are a trading investor rather than a "buy and hold" disciple. Granted the investment world seems to have leaned towards a much more tactical perspective when investing (and there's good reason for that shift given the meltdowns we've seen over the last decade), but most investors still focus on the long term by design or momentum.
Which begs the question; should this quarter's results matter as you invest your portfolio?
Remember; the current economic outlook impacts all earnings results whether on a short-term or on a long-term basis. While the recent US stimulus package may have boosted growth, it also covered up problems in the economy. At the end of the day, what is needed is for economic growth to be self-sustaining. The banking industry for example is confronted with that problem right now as the economic stimulus and bailouts are withdrawn. Bank of America reporting lackluster second quarter results directly related to short-term economic conditions is an example of that.