CNBC Pro screened data from Bespoke Investment Group to find companies that beat earnings and saw shares rise. Past performance predicts future results now. Someone should tell the SEC.
The premise here is that because a stock went up after earnings before, it will go up after earnings again. This is the financial equivalent of wearing your lucky socks to a job interview. Except the socks cost $30 a month and come with a Bespoke Investment Group data subscription.
Retail traders will read this headline and think they've discovered alpha. They haven't discovered alpha. They've discovered a marketing funnel designed to convert hope into recurring revenue. The stocks aren't named in the summary because naming them would allow you to backtest the claim without paying for access.
CNBC Pro knows exactly what it's doing. Dangle the idea of a pattern. Make it sound quantitative. Reference a firm with "Investment Group" in the name. Watch the credit cards come out. It's not fraud if you phrase it as screening data.
The stocks reporting next week have a track record. So does your cousin who keeps asking to borrow money. Neither track record involves giving you any of theirs.
Somewhere right now a day trader is calculating position size based on historical earnings beat percentages. He's factoring in implied volatility. He's setting a stop loss at exactly 7% because that's what the YouTube guy said. He's doing everything except asking himself why a pattern everyone can see would continue to work once everyone can see it.
The companies will report earnings next week. Some will beat. Some will miss. The shares will move based on guidance, macro conditions, sector rotation, and seventy other variables that have nothing to do with whether they beat estimates four quarters ago. But sure, let's call it a solid history.
CNBC Pro screened the data so you don't have to think about whether screening data from the past tells you anything useful about the future. Spoiler: it tells Bespoke Investment Group who's willing to pay for newsletters.
Photo by Anne Nygård on Unsplash
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