President Donald Trump wants to volatility of the 55 -year -old stock market, which investors depend on: the separation report.
Since the 1970s, the Securities and Stock Exchange Committee (SEC) has requested companies that have been publicly circulated to issue profit reports every three months. These reports not only reveal the company’s profits, but also information about its operations, financial risks and bonuses.
Just as he did during his first term, Trump calls on the Supreme Education Council to relax the rules so that companies must issue a profit report only twice a year – once every six months.
“He will save this money, and allow managers to focus on managing their companies properly,” which he announced on social media on Monday when he invited to change the base.
When Trump suggested the idea for the first time in 2018, SEC rejected it. But it seems that it will reach this time. (1)
Paul Atkins – Trump – told CNBC that Trump’s suggestion is a “good way to move forward.” Atkins noted that companies can still report quarterly profits if they wish, or choose to do so twice a year according to their own estimate.
Trump’s proposal began a renewed discussion about the pros and cons of the annual reports and may have some investors wondering what to do if the base changes.
Support supporters argue semi-annual reports, including ATKINS, that quarterly reports lead to short-term thinking by investors-investment suppression based on short-term results.
They refer to Europe and the United Kingdom, which has turned from quarterly reports to semi -annual reports in 2010. Was the half -annual reports led to more investment than companies more than the quarterly?
Not in the United Kingdom, according to the Colombia College of Business Studies for the year 2017, which found “there are no increases that can be discovered in corporate investment levels.” (2)
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Some investment experts – such as the CEO of Berkshire Hathaway Warren Buffett – believe in the value of quarterly reports, but they want to drop SEC in the “Guidance” section in each report, which he says can lead to “bad things”. The guidance department includes data on things such as the expected company’s revenues.
In 2018, he and James Damon, CEO of JP Morgan Chase, participated in his authorship Wall Street Journal For this purpose.
They argued that the segment of the quarterly reports “often leads to an unhealthy focus on short -term profits at the expense of strategy, growth and sustainability in the long term”, while causing a general decrease in the number of public companies in the United States (3)
They emphasized that their opinions on the guidance “should not be offended by the approach of quarterly and annual reports”, as transparency about the company’s money and operating results “is an essential aspect of American public markets.”
It is a matter of transparency, and the erosion of the investor’s confidence, and this is at the heart of the semi -annual reports.
While it is correct that the quarterly reports can prove costly and take a long time, Investing.com He highlighted how the transition to semi -annual reports “will work against investors by increasing information gaps, increasing the risk of surprises, and creating a larger space for the interior.”
and Bloomberg He pointed out that “waiting for a period of six months between official reports may feel like a lifelong in a dynamic economy” while also allowing companies to “bury bad news”.
With possible pitfalls and chances of deception, it is fair to say that the transition to semi -annual profit reports will lead to a flood of anxiety among some investors.
But there are ways to protect your portfolio, even if you are worried that some companies do not completely imminent with their financial money.
Whether you agree on Trump’s view or not in the semi -annual profit reports, adherence to investments for the long term is a formula for success. “History has shown that positive results often occur over much longer periods of shorter periods.”
Watch your investments. “Everything that happens in the addresses may not happen in your account.”
If you discover anything doubtful about the way the company reports its profits, investigate and act accordingly.
If you have concerns about any investments in your portfolio, consider the allocation of assets. Edward Mendelves, the honorary partner at the National Accounting and Consulting Company, was martyred by diversification as a safety network against everything from the wrong financial expectations of the company to the failure of the officials elected to the ruling properly.
SEC suggests doing your own research before investing in any company. This includes bypassing the financial statements provided to the committee and the sharp decline of red flags that indicate fraud or any other problem on the road.
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(1). CNBC “SEC to suggest changing the base in Trump’s invitation to end the reporting of the quarterly profits.
(2). Colombia Business College “The consequences of compulsory quarterly reports: UK experience”
(3). Wall Street Journal Opinion: The short term is harmful to the economy.
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