What was that again?

When a company does report its earnings, markets will react to the “news” in the report but the way we measure the news has to be relative to expectations. Thus, a company that reports that its earnings went up by 30% may be seen as delivering bad news, if investors were expecting an increase of 40%, and a firm that announces an earnings decline of 30% may be providing positive information, if the expectation was that earnings would decline by 40%. Thus, it is not the magnitude of the earnings change that matter but the “surprise” in the earnings, measured as the earnings change relative to expectationswrote Aswath Damodaran

Linkfest:July 25,2012

Some stuff I am reading today morning:

Investors put money in range accrual notes (ET)

Oil co’s profits are largely fiction (Firstpost)

From an unlikely source, a serious challenge to Wall Street (RollingStone)

4 Trading strategies for earnings announcements (Damodaran)

Things investors should hate:Gurus (PsyFi )

Three keys to greater wealth in the markets (Forbes)

Libor scandal detailed and explained (BigPicture)

What was that again?

Hugh Hendry has been dead wrong about China for three years now and China has not collapsed as he predicted, loudly, verbally and widely.Albert Edwards has been bearish on everything for a long time. So if you are telling me he is bearish on China and bullish on everything else that would be different. But no, he is bearish on everything, including you, me and Mother Teresa.”-said Jim Rogers

Sri Adhikari Brothers stock more fun than their serials

Sri Adhikari Brothers Television Network Ltd (SABTN) has been an outperformer in the Indian stock exchanges , gaining over a whopping 73% in the last one year (July 25, 2011-July 24, 2012)

What is interesting about this stock is as follows:

1.The EPS for 2012 is a paltry 0.71, giving a P/E of around 136.4 for this stock

2.The promoters have pledged over 86.11% of their holdings – a huge negative

3.Their debt is high relative to its equity, its interest coverage ratio is less than 2

Though I confess I have never watched any of their channels, SAB stock seems more fun to watch than their serials !