10 October 2016: Earnings season

earningsThe third-quarter earnings season kicks off this week in the US. Earnings season used to be a big thing in the past, but lately, it plays second fiddle to decisions that are made (or not) by the Fed. These days a translation table is needed to understand what goes on in the minds of investors during earnings season. These Dutch Guys provide you with the table below to help you clarify any confusions you might experience during the upcoming earnings season.

What brings earnings season? The old days These days
Much better than expected earnings Stock prices went up sharply Stock prices will probably drop substantially, because investors will assume that this will be the last push that is needed by the Fed to raise interest rates this year
Better than expected earnings Stock prices went up Stock prices will remain at the same level: it is unclear whether or not the Fed will raise rates in the short term
Earnings in line with expectations Stock prices remained level or dropped slightly Stock prices will probably rise slightly or moderately, because it might take some more time before the Fed will raise interest rates
Worse than expected earnings Stock prices went down Stock prices will rise substantially, because a rate hike in November or December by the Fed becomes now (very) unlikely

white-chapel-logo-smallLast Friday, all major US indices closed with minor losses. Volatility was on the rise all day and the VIX ended 5% higher. Our UVXY ETFs struggled a large part of the session to avoid a loss, but eventually earned its only gain of the week: +0.4%. Return for the year stands at +192% and return for the quarter, which is one week old, is at -4.5%.
White Chapel did not give a signal at the end of Friday’s session. Our models is still comfortable with our UVXY ETFs, in anticipation of more volatility.

Accumulated capital at close of previous trading day

Return since start

Return this year

Return this quarter

$29,247

+192.47%

+192.47%

-4.5%

Our initial capital was $10,000 at 1 January 2016. Our average Annual Return is 311%.

RS_v05-smallLast Friday, the United Nations International Day of Older Persons (UNIDOP) was celebrated. As mentioned in our blogpost of 22 September, René signed up as a volunteer for that day. His assignment was to fulfill the wish of a woman who lives in one of the bigger retirement facilities in his city. Her wish was rather modest: to visit the grave of her son, which she had not been able to do for over two years. The facility has only two OTs (Occupational Therapists) on a group of over a hundred ‘clients’ and, as a result, the most she could get was a walk around the block, occasionally, and on a good day.
After picking up his ID tag and two bag lunches at the organizing institution, he took her to the cemetery, just a 15 minute drive from the retirement facility. There he found out that she actually had been living in that area for more than 50 years in her better years, so after leaving the cemetery he drove her around some places from her past, an added bonus she didn’t expect. It was a small effort with a big effect. Why not turn this into a monthly event?

cemetery

3 thoughts on “10 October 2016: Earnings season

    1. You have two options: you can follow the advice that was given by White Chapel yesterday at the end of the session and – you are completely right – that would mean that you should buy UVXY. Or you can wait till White Chapel gives the opposite signal and then buy XIV. We cannot predict when that signal will come, because it depends on market developments.

      1. Ok thank you very much, i think i’ll wait until the white chapel gives the signal! thank you for your response!

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