The Harriman Book of Investing Rules by Philip Jenks

Author:Philip Jenks
Language: eng
Format: epub
Publisher: Harriman House

10. Check whether the company has met brokers’ consensus earnings forecasts in the past.

Some companies are conservative in the guidance they give analysts, beating the quarterly estimates time after time. Others give optimistic guidance, then consistently come up short. Others have no bias at all. Try to incorporate this factor into your stockpicking: a company that has a history of doing better than estimates is likely to be cheaper in reality than its P/E suggests. And a company that routinely does worse, more expensive.

‘Timing is everything. It didn’t take a genius to figure out that tech stocks were overvalued long before the peak of the boom. But you could have lost a lot of money going short on the way up, and several fund managers lost their jobs because they kept out of the market bonanza.’

Laurence Copeland

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