Surprise Profit?

A breaking news item that just came over the wire exclaimed: JPMorgan Chase posts surprise profit! That got me thinking. How could a profit be a surprise? Isn't that what companies and banks are supposed to do, make a profit? Further investigation revealed that the "surprise" was how much profit they made in the 4th quarter last year. $702 million dollars profit. Wow! That seems like a lot, except when compared to the 4th quarter of 2007, $2.97 billion, yes Billion with a "b". So again, why was this a surprise? Don't they have accountants who know this? Well, the real surprise it seems is that it beat what the "analysts" expected them to bring in. So even though having their net income fall 76% over the same period as last year, which would be considered a bad thing, since it's better than what the analysts expected, it's considered a good thing! Make sense? I didn't think so either, but that's how Wall Street works. Big ups and downs in the market usually are because something happened that wasn't expected. The market likes to be right. When it is right, it's usually a decent day. When it's wrong, bad things can happen. Of course, they can be wrong because their expectations were too low, and that could be good for the markets, as in big up days. People don't mind those. What nobody likes is to be wrong because their expectations were too high, or because news came in that was disappointing (and not expected). Those can kill the markets, and unfortunately is what we saw far too often last year. But fear not, the sky is not falling. Don't believe the hype and negativity you hear on CNBC. They thrive on bad news. Bad news sells ads. Good news does not. Take these headlines:

"Bankruptcy Cases Flood Courts at Fastest Rate in History"

"Investors Should Sell Everything"

"Consumer Confidence Dives to 17-year Low"

"Retail Sales Worst in 30 Years"

Sound familiar? Stuff you've heard and seen a lot lately, right? These are actually headlines from 1991. Yes, 1991. Now where did the stock market and the economy go from 1991? In October of 1990 the Dow was at 2365. It's over 8000 today. The point is, we've seen bad times and bad markets before. Hang in there, it's a bumpy ride, but you can come out of this alright if you're patient and don't over react. By the way, JPMorgan Chase is up today!