High Predicted Earnings – Do Your Homework, Invest Risk Capital And Make Money

How does one go about determining the most profitable investments in the stock market? There is a simple solution that does not require tarot readings or extrasensory perception. Study the commodities with high predicted earnings, and your assets should be set.

With the amazing start the stock market had in 2007, investors have a better wealth-building opportunity than they’ve had in fifty years. Right now, the economy is in the middle of its second-longest expansion since Reagan’s presidency, and the domestic market is one of the best corporate earnings environment since the 1950s, particularly because of high predicted earnings.

This time of year, when third-quarter earnings are soon to be announced and pension funding is about to flood the market, is strong for investors. After abandoning the market for the summer, seasonal investors will return in droves, and as a result, trading volume is expanding rapidly. In addition, the second half of the calendar year is when many companies announce initial public offerings of new stock.

In the market place, however, many investors mistakenly believe that there is “nothing new under the sun,” but that simply is not true. The best growth stocks come from companies with a unique product. Also, currently even value and foreign equities are trading for bargain-basement prices, and there are some great opportunities for cashing in on stocks with high predicted earnings.

Investors require high predicted earnings before they will invest in companies. A stock announcing earnings that are higher than expected will see its stock price increase, and knowing which companies are likely to announce positive earnings surprises can be a very lucrative skill.

One word of caution, though, is a phenomenon called profit taking, which simply means mass selling when a stock climbs in price and investors sell their shares quickly to bank returns. If there is ever profit-taking in a stock that had high predicted earnings, it happens right after earnings season. That is why it is usually most beneficial to buy stocks three to four weeks before their earnings are released because they often climb in earnings pre-announcement season.

Many investors do their own homework to find the companies that they believe are about to experience a hug jump in their stock price. Other investors pay for financial advisory services to do this work for them. So long as you only invest risk capital and don’t absorb more risk than they’re comfortable with, either approach can be effective.