Whisper Numbers
Ever heard of whisper numbers? Whisper numbers are actually a bit hard to define. Traditionally, whisper numbers were earnings numbers which came out ahead of official earnings. These numbers used to circulate amongst financial professionals during earnings season and sometimes got to priority clients at big brokerages. Nowadays, these numbers are much more rare given the auditing and strict rules on disclosure caused by Sarbanes-Oxley and the SEC. Whisper numbers, today, refer to the collective “whispers” of participants in the market reflecting their expectations of a company’s earnings.
The phenomenon of whisper numbers is what causes increased volatility leading up to an earnings report and it is possible for you to use this phenomenon to your advantage, at least if you’re an active trader. If you’re a long term investor, earnings from quarter to quarter are more a nuisance than anything else anyway. Watching price movement in the days leading up to an earnings report can often clue you in on whether or not earnings numbers will come in good or bad. Further, it gives you an idea of what level of interest there is in the earnings. If there’s a flurry of buying in the days leading up to earnings, you probably have an idea that expectations are on the high side. If you’re own expectations are not as rosy, it may be time to take profits. Trading down in the days leading up to earnings is a sign that the market is likely cautious of this quarter’s earnings. Could be time to take profits. Or, maybe buy more if you have your own valuations which confirm an earnings beat.
That’s just what you needed right? A named and accepted phenomenon to confirm your greatest fears about price movements during earnings season. Well, at least now you can watch the price fluctuations with a purpose. There are also all sorts of websites which offer unofficial “whisper” numbers put together from various sources (of various quality) that can help you get a better idea on what to expect. Try, WhisperNumbers.com. Registration is free, but I haven’t quite looked into whether or not the information on the site is all that great. If you happen to sign up, do let me know your impressions. Who knows, maybe armed with this extra knowledge you’ll be able to pick up a few earnings breakouts.
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Whisper numbers are very interesting to track during the peak of earnings season. It is most certainly all about expectations. Whispers provide the public an inside look at wall streets true target.