First Quarter Earnings and How to React to Them

by Andrew McGuinness     Jul 16, 2019

So you’ve decided to take the plunge and start investing in the stock market, or trade within the foreign exchange market. No matter what your investment or trade, the outcome of your investment is never predictable, not even by those with the utmost trading expertise. If you’ve received high returns during your first quarter as a new investor, for example, there’s no saying whether this is a sure sign of more high returns to come. Or is it? Here are five things that you should and shouldn’t do upon receiving your first quarter earnings.

1. Don’t get ahead of yourself

Obviously, receiving your first quarter earnings will cause a number of feelings to rush to your head. Among these, happiness and adrenaline are the most influential and may lead you to invest further. However amazing these first quarter earnings will begin to feel, you must keep in mind that this feeling is just as fleeting, as the current state of the market.

Your money might grow consistently from that point forward, but a strong ‘perhaps’ is the closest thing to a guarantee that you will get. For this reason, upon receiving the news that your investments are faring well during their first quarter you should not jump to conclusions. Do not pull your investment as soon as it begins to do well, do not go ‘all in’ at the first sight of profit. The fact is, the first quarter is still a very early stage for the longer life span of an investment to be predicted.

2. Know when to leave

If you have entered the market and made an investment that is actually not faring quite that well, do not allow your hesitation and fear to control your actions. Many novice traders assume that pulling their investments as soon as they begin to drop, or as soon as they show little signs of budging, is their best bet. However, the first quarter is, again, a fairly early stage for anything to be assumed.

The best advice would be to acknowledge the losses you are suffering, take into account why you started investing to begin with, and give your investment either the chance to grow and flourish over time or trade it for another investment. If you aren’t up for the risk, or if you’ve realized that you can’t manage it financially, it’s best to accept your first quarter losses and risk no more by pulling your investments altogether.

If you are able to take the risk, which most investors are, considering the fact that investing involves a substantial amount of risk, stay in the market and wait for your investment to settle. Sometimes there is a short settling period necessary in order for your trades to become profitable, so you will need to be patient and let this period pass before making any sudden decisions.

3. Investments are never predictable

No investment is predictable. Despite the fact your investment could have earned you plenty within your first quarter, its future may not be filled with nearly as much profit as was found in this early stage of the investment. Just as well, despite a substantial loss you may have suffered within your first quarter, this does not mean you should quit immediately because what’s to come is bound to be negative.

As would be stated by any professional investor as guidance within trading 101, there are no guarantees, there are always risks, but for these reasons, it is best to just remain patient and feel out the market.

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