1. Earnings Announcements: Opportunities and Risks
In today’s topsy-turvy investing environment, a crisis (real or imagined) is always just around the corner. Just as we’re licking our wounds from a prior crisis, there is a larger one looming on the horizon. How do you navigate through this turmoil? We propose event-driven trading—because in many ways it steers clear of general market movements and can even strive in them. Our favorite type of event is the quarterly earnings announcement. Because earnings announcement trades involve transacting around a short, well-defined window of time, they can, when properly implemented, produce positive returns regardless of the market environment. (They’re almost market neutral in this respect.) In this ...
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