Five Missteps to Avoid in Earnings Season

Last earnings season I presented my "Beginner's Guide to Earnings Calls." As a new earnings season kicks off, I want to delve a bit deeper into earnings calls by examining five common mistakes investors make when a company releases its earnings and conducts its quarterly conference call.

Mistake 1: Relying Only on Headline Numbers

The run-up leading to the release of earnings is typically littered with analysts' expectations, which are disseminated to the investment world across a broad swath of the financial media.

We sit in anticipation of the earnings release, that one metric that seems to hold the financial world in its balance. When the release is expected to be made public, investors, analysts and the media repeatedly hit the refresh buttons on their Web browsers, attempting to be the first person to obtain that data. Headlines begin to appear on Bloomberg screens, across the bottom of the CNBC screen, in "Columnist Conversation" on RealMoney.com or on Google Finance. ...