Investing Isn’t Only Betting on Successful Companies

Sometimes you’re betting against other investors and their expectations.

I learned this one the hard way.

Years ago, I had purchased Apple stock, and coming into earnings, they were looking good. Analysts were predicting Apple would beat their guidance in every way possible.

I felt like I’d bought into a rocket stock, and with this good news, I’d sit back and ride things out a while.

The earnings came, Apple beat estimates by an impressive amount, and the stock price… plummeted (relatively speaking).

Why?

The analysts who were hyping up Apple’s earnings had hyped them up too far. Even though Apple beat on everything, they didn’t beat their estimates by enough.

Essentially, I was betting on Apple, but I should have been betting against the analysts and other investors. They weren’t happy with positive results and essentially said it’s not enough for Apple to outperform its goals… it needs to obliterate them.

This is pretty illogical to me, but it was a great lesson to learn, and I’ve seen it a few times since. You can’t expect all good news even when a company is doing well. Investing isn’t only about the success of who or what you’ve invested in.


Follow my journey from non-accredited to full time investor at bootstrappedinvestor.com

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