Stop Chasing Stocks AFTER Earnings Reports

By TradeSmith Editorial Staff

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“It’s old even when it’s new.”

That’s what LikeFolio co-founder Landon Swan told me about the earnings season news cycle.

I wanted to highlight that piece of wisdom because it perfectly shows why the average investor fails to make money — or even loses money — during a time that professional investors say could be the 40 most profitable days of the entire year.

It’s human nature to want certainty, which is why the average retail investor has a knee-jerk reaction AFTER an earnings report is released.

If a company exceeds expectations and is up 10% on the day, the average investor jumps into the frenzy, fearing they will miss even more gains.

If a company’s earnings completely underwhelm, the average investor’s instinct is to log in to their brokerage account and click “Sell” as soon as possible.

But by the time they make those moves, even if they feel like they’re acting fast, that earnings report is old news.

The time to set yourself up to make real money is BEFORE the earnings announcement.

Of course, there are investors who understand this concept but have still failed to become successful traders during earnings season.

Most people have to rely on news they get from the mainstream media and Wall Street… which we all know lags behind.

And that’s a recipe for disaster.

A stock catches your eye…

You read as much about it as you can: analyst recommendations, news reports, stock forums, you name it.

You’re convinced you know what’s happening with its business and how it’s going to perform on earnings day.

Everything is pointing in one direction for you.

But then you trade on that info… and you get absolutely crushed.

The mainstream narrative falls apart.

And you’ve lost a nice chunk of money.

And let’s not pretend like it’s reliable information to begin with.

The media today is more biased than ever. They only pass along the information that serves their interests.

And it’s been extremely costly to everyday investors.

In fact, Institutional Investor magazine reported that the sum total of misinformation causes a $39 billion annual loss in the stock market.

Landon said if you don’t have a reliable way to get a sense of a company’s true earnings before they’re announced, you’re basically making a trade with a blindfold on.

But if you can place an informed trade just BEFORE earnings are announced, you have a chance to capture the massive spike or drop that typically comes AFTER.

And that’s the edge LikeFolio brings.

Instead of falling into the trap of waiting for earnings to be released — or trying to get ahead and relying on information that could be completely wrong — you can gain a real edge with LikeFolio’s proprietary data that analyzes social media chatter to create actionable advice.

LikeFolio’s Moneymaking Case Study

During the final quarter of 2022, LikeFolio’s research showed that people were posting positively about Netflix quite a bit.

Now, keep in mind that this was happening after media outlets and Wall Street had been telling everyone that Netflix was in trouble…

Have a look at this Barron’s headline:

And see what CNBC reported just a couple of weeks before Netflix reported earnings in January 2023:

Before Netflix released its January 2023 earnings report, LikeFolio received a bullish signal indicating that the mainstream narrative that Netflix was in trouble was false.

So they recommended a contrary bullish trade on their data when everyone else was down on Netflix.

And sure enough, when the company announced its numbers, everyone was caught by surprise… except LikeFolio.

Just look how quickly CNBC changed its tune on Netflix within a couple of weeks:

Now, that one trade from LikeFolio produced a stellar 112% gain in less than five days.

And that’s just one example…

The image below shows a strong bullish earnings score for the department store Macy’s Inc. (M).

That signal told LikeFolio that positive Twitter activity for Macy’s was up considerably before its earnings announcement in November 2021.

LikeFolio recommended a bullish trade ahead of that report and scored big when Macy’s third-quarter earnings and sales beat analysts’ expectations.

It turns out that sales had unexpectedly rocketed much higher than pre-pandemic levels during the quarter…

But it wasn’t unexpected for LikeFolio.

They saw strong positive Twitter activity for Macy’s before the public saw anything — and their trade produced a 376% gain in just five days.

Imagine having $10,000 in your brokerage account on Monday… then seeing it swell to $47,600 by Friday.

Again, while nobody can promise you’ll see gains this high…

These examples show the power of LikeFolio’s high-conviction trades.

In the meantime, LikeFolio has six moneymaking trends you need to see immediately.