Earnings Expectations, it's a game...

You have to wonder why every CEO doesn't work themselves to death to keep expectations for their companies' earnings as low as possible ...at least coming-up on earnings announcements, as we are today. The lower the expectations in the weeks prior to an announcement, the more likely is the stock to see a rise following even a met-expectations performance outcome.

You just have to wonder if this isn't all just a game.

How are individual (retail) investors to interpret what they hear from analysts in light of how easily swayed the markets can be by the opinions of those in-the-know at the companies in which they invest? The answer is that any interpretation is likely to be wrong about half the time. Even those with access to more information on the actual performance of publicly traded companies get it wrong about that often ...just look at the track record of the best analysts of late!

As tempting as it is to get caught-up in the excitement of earnings season, long-term investing is likely the only way a regular-joe investor can protect themselves against the affects of the games played on Wall Street. There is a new push to see top executive earnings tied more to long-term performance than stock price valuations from quarter-to-quarter. Hopefully this alignment of interests between those who run these companies and the folks who invest in them will benefit us all.