Monday, January 12, 2009

It begins.

I made a lot of money in the stock market today. The reason is because people realized Alcoa was *probably* going to report dreadful earnings, and this is significant - as I mentioned in my last post - because Alcoa is the first company to report in the S&P 500 earnings season. They are something of a barometer for the flighty, never-forward-looking market.

The market didn't get to see Alcoa's results because they didn't report them until after the market closed. The results were, of course, horrid. So horrid as to make analyst estimates a joke. Analysts are so ignorant and crooked, that they predicted Alcoa would somehow profit in the historic credit freeze and collapsed steel market (Alcoa sells steel!). The estimates were that Alcoa would earn 9 cents per share. Close...they actually lost $1.49 per share. The difference between the two represents over a billion dollars. The company lost around 28 cents per share I believe in their operating results, and the rest was writedowns. The media is reporting this as if the writedowns don't count. Almost every one of the 500 companies making up the index will have large writedowns, so they absolutely count.

I'll post my portfolio later today since some folks may have missed that I dumped all my 2x inverse ETFs and instead shorted the regular 2x ETFs.

1 comment:

Rich said...

Wow I can't believe analysts messed it up that bad. Okay, yes I can. I interned at an institutional money management firm in college and I always thought analysts estimates were a joke. They would never stray far from each other, so really, what's the point in even listening to what they have to say.