Thursday, July 9, 2009

It's good to be not so bad

In the strange world of investing, sometimes news that is bad, is really good news. Yesterday Alcoa posted their 2nd quarter earnings and analysts got to pour over the report and compare it to their forecast. Surprise! Despite posting their 3rd consecutive quarterly loss in a row, the company beat the forecasted loss of 38 cents per share, by 12 cents! In other words, even thought they reported a loss of 26 cents per share, that was not as bad as expected, which was good news for the company and the stock. Shares of the stock gained for the day and surged even higher in after-hours trading. So what does this all mean? Well, Alcoa is one of the companies represented in the Dow Jones Industrial Average. In addition, they are considered a bell weather stock and a barometer for how other companies might do in the coming weeks as more earning reports are published. The good news reported by Alcoa yesterday is that they see signs of recovery in the global economy. So all the bears out there thinking that we could retest the March lows, could be in for a surprise themselves. Who's camp are you in?

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