26 Apr 2002 The Times They Are A Changin’
Posted at 15:53h in The Friday BriefAnother word for risk is volatility – specifically negative volatility. Webster defines volatility as the tendency to vary often or widely, as in price. Obviously, we worry more when stocks vary downward as they do in bear markets. April and October are the market's most volatile months. It is during these months that companies report their first and third calendar quarters. The first quarter is important as it sets the tone of the year’s earnings expectations. By October, enough of the year is ‘on the books’ for the company to give a rough idea of what the year will actually look like. It is a time when ‘confessions’ are made if the company was too optimistic earlier in the year. It also used to be a time when management expressed excitement if they had an exceptionally good year. SEC Regulation “Full and Fair Disclosure” has effectively minimized those wildly optimistic statements because of the liability brought if they are not met.