What is drift after earnings?
Publicly traded companies report revenues on quarterly and annually. This is a financial report that reveals profitability and sale during the period. Before announcing financial analysts and company executives often make predictions of what these results will, and investors tend to respond to the results based on the specified barometer. In some cases, investors' reaction is delayed and as soon as it is determined, it seems to develop for weeks or more. This phenomenon is known as drift after earnings and earnings and represents some profits obtained and losses achieved in the stock market. If profit results are better than expected, for example, shares will proceed in response over time. Conversely, in the case of disappointment from earnings, shares lose land throughout the drift. Certain researchers suggest that drift theory, which is also known as the effect of standardized unexpected earnings (SUE) suggests that investors do not respond adequately to significant profit data.
in thatThis is a market theory that investors naive respond to the company's earnings report. In its simplest form, this strategy should allow investors to buy shares that have recently announced better than expected earnings. If the investment is held for several months, investors should benefit.
Professional investment managers, including mutual fund managers and hedge funds, could also use an instance after earning teaching and trying to earn a share movement. Some mutual fund managers even declare theory as the primary strategy of the investment portfolio portfolio. The disadvantage, however, is a large amount of volatility in the fund, which is a risky proposal. The composition of the investment fund is also unlikely to reflect diversification, because the aim is to follow the surprise of earnings, not traditional exposure. The unpredictable nature of drift also leads to volatility at the pace in whichFunds flow in and out of investment portfolios in the hands of investors.
Scientists, analysts and other financial experts often monitor the performance of different investment strategies and receive average monthly or annual profits of obtained through these styles. Market participants tried to use this approach with investors who apply drift style after earnings. However, the results seem inconclusive because attempted to monitor investment performance is blurred by many variables. Some research studies suggest that the cost of completing transactions on financial markets strongly affects the profitability that this opaque investment strategy brings.