Question 73—Earnings Reports
Answer 2 Selection “An earnings report never changes a long-term stock trend” is incorrect.
When we buy a stock, we are paying for future earnings and dividends. Insiders have the best knowledge of those factors, and many of them profit from it. Stocks seldom jump on earnings reports because smart bulls have already bought or clever bears have already sold. Still, the stock of an honestly run company can change its trend following a surprising earnings report.
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