The Wild Swings Of Results Season
The Chaos of Earnings Reports
Extreme Market Reactions
We all know that results season is volatile. It goes with the territory. But some of these moves? Absolutely crazy. Take this morning, for instance—Audinate (AD8) has gone parabolic like it just found out it’s the best thing since sliced bread. Meanwhile, Bendigo and Adelaide (BEN) is doing its best impression of a skydiver without a parachute. How do analysts get things so spectacularly wrong? More to the point, what happened to continuous disclosure? Or investor relations departments? Are they all asleep at the wheel? Because it sure looks that way.
The Role of Trading Bots
Maybe the real problem is the trading bots—buy first, analyse later. Is that what’s going on here? Some of these reactions have been absolutely knee-jerk, with Westpac (WBC)—one of the most overanalysed stocks in existence—getting whacked by 5%-plus. Back in the day, companies would discreetly ‘whisper sweet nothings’ into an analyst’s ear to make sure they weren’t about to make fools of themselves. Now? Forget getting them on the same page—they’re not even in the same book.
The Decline of Analyst Research
Are Analysts Still Relevant?
Have we really reached a point where research is so bad that major stocks are moving like meme stocks? Sure, you expect chaos in heavily shorted names like AD8—low coverage, plenty of surprises. But BEN or WBC? That’s not supposed to happen. Analysts get paid obscene amounts of money to model these companies, yet they seem to be consistently gobsmacked by earnings season, like goldfish discovering the same plastic castle in their tank over and over.
Compliance and ‘Confession Season’
Maybe compliance is partly to blame—no one wants to be caught passing along those old-school “whispers.” But come on, there are plenty of ways to give analysts a clue. We even have a name for it: ‘confession season.’ And yet, here we are, with BEN tanking 17%. Of course, the stock had already been up 30% in a year, thanks to the sector-wide bubble.
The Investor Perspective
A Rollercoaster Ride
For investors, it’s like riding a rollercoaster blindfolded—thrilling, nauseating, and potentially disastrous. Now that the cat’s out of the bag, the real question is: has the bank bubble burst with BEN and WBC? If nothing else, it proves just how good the CBA result was. And don’t even get me started on how spectacularly wrong the entire analyst community was on that one!
The Analyst Paradox
I once described analysts as nuclear weapons. You only have them because everyone else has them. They are bloody expensive, don’t really do anything, and if you do use them, then the consequences are too dire to really contemplate. Best place for them is Nebraska perhaps! Or Greenland maybe!
Henry Jennings