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Profit warnings: Numbers, Time periods and What must you do?

By |February 29th, 2012|Tags: , , , |

 

If a company in your portfolio issues a profit warning should you sell, buy more or just stay invested?

That is exactly the question I asked myself after experiencing quite a few profit warnings recently. I wondered if there wasn’t a tested rule I could follow that for example says sell immediately after a profit warning is announced and buy the position back in a few months’ time.

I decided to take a look at a research studies on profit warnings to see if there is not a strategy that will make you come out ahead.