THE QUARTERLY SYNDROME

Over the past few years with profileration of TV business channels and the compulsory announcement of quarterly results by companies everyone has been flooded with analysts talking about quarter on quarter growth of sales,profits etc.In fact the quarterly numbers of Infosys (which normally heralds the earnings season) is virtually a festival of sorts in some business channels and the market awaits with bated breath for the numbers to come out.With all these analysts ramblings (Forgive them,they have to fill in 24 hours content for their channels) it has become a huge confusion for long term investors.On top of it you have earnings estimates that are shown to the viewers before the results are announced.So there are comparisons between estimates,actuals,previous quarter earnings and then previous year corresponding quarter etc.At the end of it the market pronouces it verdict.In line,out line etc.Question is does this provide any guidance for the investor to make his decision.The answer is NO.

The 10-11% growth on Q-on-Q reported by the IT majors like Infosys,TCS etc somehow give the investors a very short term view of the company and make them exit if the near term results are disappointing.However the past several years have proved that a company like Infosys has consistently posted above industry average growth and a year end of 40%.So a long term investor is shaken off due to short term volatility in the results and near term market movements in what is essentially a solid long term investment.

So keep your eyes and ears open on all the news that is sorrounding the investment you have made but unless there is a huge downtrend in the performance of the company keep faith in a good management.It pays off eventually in the long run.

As somebody nicely said,long term investment in a good stock is like purchasing a piece of real estate.One does not look at real estate prices on a daily basis.Just because all the Television channels are rambling about the results 24 hours and come to conclusions it is not necessary for you take a decision to either enter or exit the stock.