God missed …
The weather forecast for today, in my area was for clouds – Lots of clouds. As I look out my window, squinting from the sun, I can’t see a single cloud in the sky, anywhere. God has failed to deliver the clouds predicted by the forecast. God is a failure. Time to get rid of God and have the Universe controlled in some other way.
Obviously, the above paragraph lacks common sense. But investors are continually exposed to, and assimilate, the same silly logic.
Today, Cisco Systems, a stock I’ve owned for a decade, is being traded at prices which have declined. The media, attempting to explain this decline, are continually informing the public that “Cisco failed to meet analysts estimates” because earnings reported last night were only 18 cents, whereas analysts predicted 19 cents. Currently, CSCO is crossing the tape over $5 down, at $30.
I find this annoying. CSCO is a publicly traded company. As such, it is required to make certain facts available. Its mission is to carry out their business in such a manner as to generate profits for their shareholders. Hopefully, they carry out their mandate in a legal, ethical, and efficient manner, and have their efforts bring forth the desired results. This is the proper role for CSCO, and for that matter, other companies too.
The responsibility of estimating the performance of companies rests on analyst’s shoulders. It seems obvious to me that when predictions and reality are inconsistent, the blame, if any, resides with those responsible for the predictions, and not, as commonly reported in the media, as a failure on the part of the company. If one wishes to point the finger of blame in such cases, it should point at analysts.
I would find it refreshing to hear some newsreader announcing, in the excited tones they seem so fond of using, that “With respect to CSCO’s earnings, ANALYSTS ESTIMATES WERE INACCURATE BY FIVE PERCENT!!!”, placing the blame where it belongs, for once. And while they’re at it, they could also mention that CSCO has been offering lower guidance for some time, and the analysts still got it wrong.
Some gentlemen’s understanding between the analysts and the media must be responsible for this blatant distortion of perception. Once the public recognises that companies tell analysts what to predict, and that analysts tell reporters what to report, and that reporters tell the gullible how to invest, we’ll all be better off.
Cheers, PW. |
