The Conference Call

Most public listed companies are expected to release their results every 3 months.  Smaller companies may just put out a press release, but more established companies use a "Conference Call".  During this time the company releases their results, from the 3 previous months, via a audio presentation, telling you revenues, earnings per share, and other details.

The conference call is proceeded by a press release with the basic details of how the 3 months turned out. Then it's up to the management team, to clarify those results, and answer questions.  Different companies have different ways of measuring success, because businesses are different. Wallstreet calls them "Metrics".  You always want to know what metrics Wallstreet gauges a certain stock on.  Those figures allow analysts to make projections, and come up with an estimated earnings per share (EPS) for the current year, and in future.

These conference calls contain a ton of amazing information about the market.  You get to know the management team on a personal level.  You can hear their confidence, or lack thereof, in their voice, and about the business' future.  You hear them answer tough questions.

The best part is nobody really listens to conference calls.  For the most part they are boring.  Actually sitting down and taking 30-60 minutes to review you stock, every three months, is too much work for the average investor, and even for some pros.  Here we have an amazing resource, where at times, I've literally heard CEO's say, there is no way we don't make more money than last year.  They don't say it in those terms, but they say they have more customers, that will pay a higher price point, which always equal more money, if they execute.

These CEO's are obligated by law to tell you the truth, and 99.9% of them do.  They are all however, masters at bending that truth.  A good CEO can paint a beautiful picture when times are great, and still a pretty decent one, when times are tough.  They know how to spin their business' to make them sound better, and there's nothing wrong with that.  You just need to be able to read between the lines.

The first stock you buy, why not listen to a conference call, watch a couple of earnings periods before you buy?  This is some of the work involved in determining how to value a stock.  A lot of the time it's just watching, reading, and listening.  The majority are too lazy to do all that.

That's great news for anyone who isn't.  If you put in just a little time a week, and listen to the conference call, you should be able to eventually make an informed decision on whether or not, you think something is buy, or a sell.

Listening to the conference call is probably the smartest thing you can do in investing.  There is nothing more important than fundamentals in this game.  If a business has good fundamentals, it has good profitability, with growth potential.  You can find out right from the horse's mouth, if now is the correct time to buy that certain stock, or whether there could be danger ahead.

Most people don't listen to conference calls, good thing your not most people.  Now, on to "Big Caps Vs. Small Caps"...