Earnings season for the first quarter of 2019 is almost finished. Over 90% of companies have reported. According to FactSet, 76% of those reporting have beat their target EPS estimate. This is a better beat % than the historic average of 72%.

However, what’s insightful is that FactSet also reported that companies beating EPS estimates where bid up less than normal after they reported. Stated differently, those beating where rewarded less. In addition, those companies that missed their EPS estimate, suffered a greater sell off than what companies normally experience when the miss. Stated differently, those missing on earnings suffered more. You can find the FactSet article here: https://insight.factset.com/market-punished-sp-500-companies-reporting-negative-eps-surprises-in-q1

I take this as a sign that although earnings are good, Mr. Market is currently cautious. We can use this to our advantage by selecting which company stock to buy and by avoiding new purchases of widely diversified investments such as mutual funds and exchange traded funds.