Trump asks SEC to study potentially scrapping quarterly earnings reports

Discussion in 'The War Room' started by Trotsky, Aug 18, 2018.

  1. Trotsky

    Trotsky Gold Belt

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    I'm conflicted as to this move. On one hand, moving American corporations away from short-term pressures and allowing greater emphasis on long-term development is a good thing.

    On the other hand, I cannot imagine this move having any tangible effect on those incentives, other than a marginal reduction of administrative costs. In reality, this would seem to, more than anything, undermine transparency and allow more greater incidence of insider trading and ripping off investors generally.

    While the purported objective - widening the scope of corporate decision making away from decisions based on quarterly earnings - has merit, I am skeptical that depriving investors of information is the proper avenue to achieve it. This smacks of more policy making for the powerful.

    @JonesBones @PolishHeadlock @Jack V Savage - what say you?

    https://www.ft.com/content/c1d133aa-a211-11e8-85da-eeb7a9ce36e4
     
  2. bobgeese

    bobgeese Silver Belt

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    It’s honestly not a bad idea.
     
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  3. Trotsky

    Trotsky Gold Belt

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    I'm shocked that you honestly came to that conclusion.
     
  4. JJSBUR

    JJSBUR Purple Belt

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    It is a cost born by business but there is also a benefit to the reporting.

    There would have to be an analysis of the cost vs the benefit. I don't know where the benefit stops equaling the cost.
     
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  5. HereticBD

    HereticBD Titanium Belt

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    I'm super shocked that you agree with it, but are looking for reasons to find it abhorrent.
     
  6. SBJJ

    SBJJ Gold Belt

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    I hate the idea.

    Shorts would now have half a year to drum up rumors in between earnings reports
     
  7. Lead

    Lead /Led/ Staff Member Senior Moderator

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    Yea, I can see the pros matching the cons on less reports in the sense, you have a bad one and you have a longer time dealing with it compared to a good one.
     
  8. VivaRevolution

    VivaRevolution Whoopin' Belt Double Yellow Card

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    Yeah, I'm seeing the same thing here. Good that corporate america wouldn't work to the quarterly report, bad that it would increase opportunity for fraud.
     
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  9. pinger

    pinger Brown Belt Platinum Member

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    It is the sort of metric any business would be monitoring internally anyway, so the argument that it costs money does not stack up.

    Other more important red tape issues out there.
     
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  10. Jack V Savage

    Jack V Savage Secretary of Keepin' It Real/Nicest Guy on Sherdog

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    Hmm. I can see some value in the idea. Some cons, too. I'll have to think about it. If it really is just asking the SEC to consider it, that's a good idea.
     
  11. Jack V Savage

    Jack V Savage Secretary of Keepin' It Real/Nicest Guy on Sherdog

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    Let's remember that corporate America currently has the option of not working to the quarterly report.
     
    Gandhi likes this.
  12. bushman505

    bushman505 Double Yellow Card Double Yellow Card

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    I agree with it but since it’s Trumps idea, I’ll fight it to the death. He’s literally hitler.
     
  13. JJSBUR

    JJSBUR Purple Belt

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    Managerial accounting is what they monitor internally. That is a bit different.
     
  14. JonesBones

    JonesBones Excuse my contraflow

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    It's a good idea because it discourages short term thinking. These companies are still slaves to analysts though. They will just be slaves twice a year now instead of four.

    As an investor, I would personally prefer quarterly because I like action and volatility. Having it reduced from 4 events to 2 would make those 2 more volatile but too spread out. I like earnings season because companies are crashing left and right. Many rising too. But I like it is as a good opportunity to buy good stocks cheap. But yeah, these companies have to worry about this shit and the most important part of their business becomes tweaking these numbers for analysts.

    An accounting report is like a photograph. It never shows the real you. Just like one fight or game doesn't show your best skill set. Your hair may be a little off. You didn't shower. You wore sweatpants. You look like Ronda Rousey in public basically. But then for one day you can present Rousey all airbrushed and shit for a one day photo shoot and make her look good. It just creates an artificial system and is a big reason why Japan collapsed.

    WAtch this starting at around 51:35 for about 10 minutes. He explains how this started. It started with ratios.

     
  15. SBJJ

    SBJJ Gold Belt

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    Shareholder value will not be helped by this IMO.

    The Feds and Trump included should stay away from this. They create messes where there is not one. Blowback is a bitch

    It wasn’t that long ago politicians were screaming about CEO pay. So many companies switched to a stock based pay. It did nothing but widen the pay gap even more.
     
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  16. Lead

    Lead /Led/ Staff Member Senior Moderator

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    A balance sheet is a picture in time but p&l would capture the period as a whole rather than the final day. It doesn't matter if you pretty up the final day earnings if the rest of the quarter sucked.
     
  17. JJSBUR

    JJSBUR Purple Belt

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    Best post so far.
     
  18. Lead

    Lead /Led/ Staff Member Senior Moderator

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    That was a problem initially until people started realizing that giving away stock options did delude the stock and there actually was a con to it. Initially, company's just thought it was a free write off the way it is reported but they eventually sobered up. It's not as bad as it use to be.
     
  19. RockstarChris

    RockstarChris Dwight Belt Banned

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    i say we go weekly.
     
  20. JonesBones

    JonesBones Excuse my contraflow

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    What matters is cash flow and guidance. That is pumped up through short term investments that lead to long term problems. There is no real time frame because it is a dynamic process of short term investments. There is no goal even except to make more money. The cult of cash flow. These companies revolve around having cash flows to please analysts.

    And this leads to Japan because Japan has a ton of cash but is still massively in debt. This scenario has already been played out in Japan.
     

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