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Monday, June 18, 2007

Scrap Quarterly Earnings Guidance?

From Financial Times:
"An unprecedented coalition of large companies, pension funds, and trade unions will on Monday urge corporate America to scrap quarterly earnings guidance in an attempt to curtail the influence of hedge funds and other short-term investors......continue here"

This move, if succeeded, is definitely bad news for short-term investors and traders alike. There is less transparency and in fact from a contrarian view point, I think this move will subject the stock price to greater fluctuation should a surprisingly good or bad earnings result comes about as there is no prior guidance for some sort of bench mark. Without earnings guidance, it will be hard for short-term investors to manage their positions as they are unable to tell if the reported good (bad) earnings results for one the past quarter will continue in the next few quarters.


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