Earnings Season: Expectations Too High?

Previews of the upcoming earnings season has already kicked off as Time Warner and Intel have started throwing around numbers. The shares of these companies are off as it seems investors may be suprised that earnings will not be as high as previous years. May I remind everyone that these earnings are for the fourth quarter. Remember the fourth quarter? The quarter where the market nosedived. Many companies slashed prices to try and stay in the black. Earnings estimates were cut. Why does it seem as if investors may be forgetting the not-so-great news that is going to be confirmed over the next several weeks? It will be hard to find a company that actually truly surprises on earnings. When I say truly surprises, I do not mean a lower loss than expected. I am talking about positive signs that the company may have been able to throw off much of the pessimism that we have seen. To get over this bottom, we have to take the upcoming news in stride and look forward to a strengthening economy. We have to realize that losses will happen. There will be a few more writedowns. We need to remember that we are coming from a trying quarter. Earnings will not come in much higher than the estimates. We need to take in the new year and see where we are headed this year. The last one is gone. Remember, learn, and then look at this year as a new experience and one to grow in.