The month of October has always been a tough month for stocks. Perhaps it’s related to third quarter earnings, which tend to be the fiscal year’s weakest. October is always a “wait and see” month.
In fact, it’s a “wait and see” stock market right now. Despite some great investment opportunities out there, I wouldn’t be taking on any new positions, at least until you can digest a company’s third quarter financial results.
Earnings season is always the best time to be researching new stock market investments, particularly because you get to review a company’s most recent financial performance. You also get to listen in on company conference calls, which can provide you with valuable information.
If you’re an individual investor and you’re not in the practice of listening to company conference calls, I suggest you pick up the habit. Very often, you can dial a toll-free number and listen to a company’s review of its operations, its future prospects, and a question and answer session at the end. Usually, Wall Street analysts and institutional investors are asking the questions, and the answers can reveal a lot about a company’s confidence in its future. You won’t get any inside information, but a company conference call can go a long way to helping you develop a “gut” feel for a prospective investment.
Last year, I listened in on a company’s earnings conference call, and it revealed to me a strong sense of uneasiness about the company’s management. The company was experiencing great success and its stock price was going up big time. Wall Street execs were asking intelligent questions, but management was elusive and downright unprofessional in its responses. I just knew that this was a company (and a group of people) I did not want to invest in. Two quarters later, the company’s stock price tanked as they reported major quality control problems with their products. These people weren’t making honest products, and they weren’t being honest with stockholders. Greed seems to have this effect on people.
So, now that we’re into third quarter earnings season, do yourself a favor and listen in on company conference calls. Even if you aren’t a stockholder and are just researching a new company for potential investment, a company’s conference call can reveal a lot.