Comment on Management Guidance Is Mostly Worthless

Management Guidance Is Mostly Worthless

What managements (and analysts) don't understand about their obsession over “guidance” is that it sets you up for a nonlinear response whereby a slight disappointment creates an outsized reaction, usually more on the downside than upside. Rather than make stock prices anti-fragile, guidance makes them more fragile. Management's quest for optimization of their stock price becomes self-defeating.

 

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