| Why They Whisper Quick Links |
Who's whispering?
How do they know what to whisper?
Could you repeat that?
Let's agree to disagree.
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| Who's Whispering? |
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There are hundreds or potential information sources out there, all with varying degrees of legitimacy. See the related article The Truth About Bull.
Certainly you have heard of Wall Street's "whisper numbers." These apply to the numbers that the markets are expecting, and therefore the results of those numbers usually have already been factored into the price. For example, when a company releases improved revenues, and the street was expecting even more growth, the stock often goes down on the good news.
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| How Do They Know What To Whisper? |
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Analysts and brokers factor in several criteria to develop their wisper numbers. For example, if the economy is slowing, they may begin to expect slower sales for auto manufacturers. If that same company then makes a statement that they will not meet expectations, those wisper numbers may be lowered even further. Whisper numbers are simply 'educated guesses' by analysts in an attempt to create an advantage and be able to predict future share price action, in an attempt to use this informational advantage to profit.
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| Could You Repeat That? |
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However, be cautioned that there is a reason that these numbers are whispered, rather than published or shouted. The analysts are working with imperfect information, as the publicly traded companies do not have to make inter-quarter numbers available unless they want to do so. Quite often the numbers are wrong, because as we stated above, it is just an educated guess. That guess is only as good as the analyst's expertise, and the quality and volume of information he or she has received.
It's like getting in a fight with your spouse and only mumbling the comment that you don't want them to hear. You wanted to say it, but just not too loud.
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| Let's Agree To Disagree |
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They are also whispering because these estimations are not originally intended for public knowledge. They are to be used for an investment advantage by the analysts themselves, and only percolate out to the public through secondary sources.
As well, it can be proven that the estimates are not always right, because they very often disagree with each other. That is why most people use the 'consensus' estimates to base their future expectations, which is the combination of all leading analysts' opinions.
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Related Features |
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Money Matters Page - Money Matters are a unique series, with emphasis on statistics and historical patterns. Focus is applied to the analysis of data as a major part of the features, and the implications of the results for penny stock investors are revealed.
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Quotes, charts, and research (15m delay) are available for most NASDAQ, OTC-BB, and North American stocks through Bigcharts.com.
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