The Danger of Holding High Yielding Stocks Or any Stock Through Earnings Announcements

High yielding stocks like CTL may seem great ideas, but understand the risk involved with such a high yield.  Those yields can get cut, crushing the stock and negating the benefit of why you own the stock in the first place.  Risk management is the only way to reduce the risk.  Adjust position size and use stops accordingly.

Case in point is CTL.  Read this.  The dividend was cut after last night’s earnings report which beat by almost double, and the stock price is down 16% this morning.

Any stock can get devastated by an earnings report.  Look at what happened to AAPL after the last earnings report.  Know when your company reports and consider scaling down or exiting before that report.

Look up ticker RAX if you need a lesson, and ponder the chart below.  RAX was crushed 20% despite solid earnings.

RAX

 

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