Dollars and Sense

It's mid-October, and that can only mean one thing: earnings season is in full swing.
Technically, earnings season is a year-round occurrence as businesses release their quarterly profit/loss reports. These numbers determine how investors respond to the stock market ... but, even more important, they influence the lives of everyday folks. From rising oil prices and a weak dollar to a housing slump and ongoing credit turmoil, these economic problems can be traced back to the performance of publicly traded (and privately held) companies.
By October 19 -- which is also the 20th anniversary of "Black Monday" -- businesses as diverse as Allstate, Google, and Schlumberger will present their earnings results for the third quarter. Financial analysts have forecast good news for these companies' earnings per share amid the latest market "correction." This could be a sign of a healthy economy ... or the foreshadowing of an economic crisis.
Serious investing is about long-term goals, not short-term gains. Unlike playing a game of chance and hoping to beat the odds, making a financial commitment to a company's future involves taking a calculated risk. All investors want to make money, but that alone isn't a strategy. Observing the market over a period of time and studying its many sectors is what separates the "bulls" and "bears" from the "pigs" and "ostriches." (Mutual funds are the most common investing tool.)
Earnings season is an opportunity to gauge one's tolerance for risk vs. reward in uncertain times, because lions may be king of the jungle ... but, on Wall Street, no animal reigns supreme.