re: Stocks...

quote:

---

If you don't mind, I may just kind of pick at your response over the course of a few posts as this really is a lot to think about all at once. Two things I'd like to talk about first: Earnings v. Revenues; Taxes

---

I told you to get a beer, I drank two while I wrote that. Please, take your time, I've got off work tomorrow and Friday. I'm reading Quant and going for a run with my new shoes (maybe some ncaa), and that's it. These are the best kinds of conversations on this board, by far, I enjoy them very much.

quote:

---

It just seems to me that earnings are what equity investors are most concerned with. How often do you here someone say, "Hey, fizz, when does GOOG report revenues?" Maybe in your line of work you do legitimately hear that. But IME individual investors are fixated on earnings as they are below the line. Revenues mean nothing in and of themselves. It's profit that counts for individual investors.

---

I personally completely agree with you. I look at the NI number, and I feel like it is more important than EBIT and EBITDA, with CFO/FCFO being a close second. My initial question about revenues is related to my perception of the market's typical reaction to earnings reports. For instance, Alcoa always leads the quarter. They've lost money consistently for a bunch of quarters in a row, but the reaction (at least the past year and a half) is always "but revenue is growing." I'm gauging that off the initial movement of the stock, and of the snippets from analysts in the marketwatch/bloomberg articles I see. Just using that as an example, but I see it all the time. Again, this might be my "market" versus your "market." My market reaction is based off of sell-side analysts quotes and financial media reports, yours seem to be more related to small investors. I think that is the major difference.

My true market following only goes back to 2007, so maybe this is the typical reaction coming out of a recession, just looking for revenue growth, then worrying about efficiency/profitability later. It might also be continuing or be amplified by the ridiculous rally of the last year and the risk trade being back in full force. The easiest way to justify a ridiculous valuation is to focus on revenues and ignore everything else (see: Tech).

I hope that clears up what I was saying, my opinion (earnings are more important) vs what (to me) appears to normally be the market opinion (revenues only matter, frick earnings).

quote:

---

On to taxes. I was off on my thinking the increase in taxes was due to expansion. I'm going off of memory here and it's been a few weeks since they reported. Here is the exact phraseology from the filings:

---

I'll break this up into another post and do it later tonight or tomorrow.