"After-Hours" stock movement

Investment Analysis Clubs Saul’s Investing Discussions
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Friends,

If Monkey hears about AH or “After Hours the stock is up/down x%” he’s going to screech.

IT DOES NOT MATTER WHAT HAPPENS IMMEDIATELY AFTERHOURS after an earnings report.

Why? Because those are robots scanning bare numbers which may or may not be the whole story. It is absolutely no different than standing at the roulette wheel and plunking down lots of money on black or red and yelling really loud in the process.

Consider, as one of a million examples, NTNX. Immediately after the report, stock is down 5%. Oh no! “Good earnings, but something is wrong.”

Consider that the stock is now up 2.5%. What shifted about the company or the earnings report in the last 12 hours? Nothing, except that humans had a chance to actually read, process, think, analyze and make an informed decision rather about the course of the company.

Reactivity in investing is not good for your health nor for your wealth. After-hour movements are nothing but Sound and Fury and something about an idiot.

Please, friends. Let’s help keep this board meaningful and different from mere agitation. Let’s focus on the companies and the results and deep thinking. Keep after-hours shadow-boxing out of it.

And for those who are gonna throw rotten boomerang bananas at Monkey by saying something like “Well, AH movements are another piece of data and we should take everything into consideration,” Monkey wants you to consider that there is such a thing as false data and data that misleads and data that creates more noise than signal and that often––very often––the data is no better than the where the ball lands on the roulette wheel. Unless you’re a gambler, AH price movements in the age of robot investing should mean little more than nothing to you. IF the results were good, you’ll have plenty of time to buy more. If they weren’t good, you’ll have a chance to sell, still.

Humbly Yours,

Monkey (Long NTNX and happy that his down 5% AH frown got turned upside down : )

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Ah but it can be an opportunity. If Mr. Market’s crazy cousin ‘Mr. Aftermarket’ makes you an offer you can’t refuse, why refuse it?

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Yeah, I’m with UtahChris, Monkey.

  1. The AH price movement lets me know the market’s initial reaction to the earnings release. I find that interesting.

  2. It can alert others to an opportunity.

Besides most trades are now done by computers.

But no rotten bananas, Monkey. You’re one of my favorite longtime Fools!

Matt
Long Bananas

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Consider that the stock is now up 2.5%. What shifted about the company or the earnings report in the last 12 hours?

And now back down 5% after topping out 5% higher shortly after your post.

I find the whole nature of short-term price movements intellectually fascinating but largely irrelevant for long-term investors. You can drive yourself nuts trying to squeeze an extra $0.10 out of a stock or trying to figure out why something was up or down over the short period of time.

Unless you’re a gambler, AH price movements in the age of robot investing should mean little more than nothing to you.

I totally agree with the sentiment and think it extends not just to after-hours but to regular trading in the aftermath of any release of relevant news.

good luck,
dan

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I would somewhat disagree Monkey. If numbers are good, forecast not bad, and stock drops I often buy in AH. And it’s not $.10 I’m looking for but several dollars.

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