There are very few earnings related articles that catch and keep our attention. But a week ago, Jason Zweig at the Wall Street Journal wrote what we believe to be a 'calling out' piece that takes on the analysts and fellow financial journalists when it comes to earnings estimates.
The article is titled 'Why You Shouldn't Buy Those Quarterly Earnings Surprises' (just click to view, it's an open link, no registration required).
The content may be obvious to some (maybe most of you). But the most important aspect about the article is that it was written at all. Yes, other articles have hinted at analysts estimates lacking any true meaning or providing any value, but none (let alone the Wall Street Journal) have ever brought the topic to the mainstream in such a clear and factual manner.
We've been stating for years (since 1998) the simple fact that stocks don't consistently move higher when they top analysts estimates, nor do they move lower when they miss. And that the majority of companies meet or beat analysts estimates quarter in and quarter out, yet the majority of stocks do not move higher. It's one of the reasons why we created WhisperNumber.com and found a better source (investors) and much more useful earnings expectation.
We can only hope that this article, topic, and facts presented can gain ground. Share it with your friends, and place the link on your twitter and facebook accounts. It will only help independent research companies like ours continue to provide better data to you.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.