No More Monthly Happy Meals
Yesterday I was talking with a friend who works for a major technology company about the way many public companies are forced to live quarter to quarter. Information that is relatively obscure and difficult to decipher when viewed on a short time frame, is latched onto by analysts and the media to make predictions that rarely come to fruition. That’s a sad reality yet it is something I stress frequently when I discuss my investing with clients. If you are an investor with a long-term time frame, don’t sweat the short-term fluctuations.
This morning financial media is abuzz with the announcement that McDonalds will end the practice of releasing its monthly same store sales numbers. Given the company’s recent performance, this move makes them an easy target for criticism. Yesterday’s headline clickbait is brought to you by slate.com:
Nice headline right? Did you fall for it? Did it make you think McDonalds is in trouble so they decided to stop reporting monthly sales because they have something to hide? Is that really what happened? No. Not even the author believes that:
While it’ll be sad to see the monthly figures go—especially if your job is to report on McDonald’s fortunes (or lack thereof)—this is probably a good decision for the chain.
If McDonald’s sales aren’t scrutinized by investors every month anymore, the company might finally have some breathing room to improve.
The only party guilty of trying to trick you here is slate.com with that lame headline.
We live in a big data world with data analysts, data scientists and data engineers. Cable tv, the blogosphere and twitter are just a few of the countless services that thrive and rely on data to supply their information firehouse that society has become addicted to. The problem with getting information 24/7 is that there isn’t possibly that much information that is relevant to our needs.
Do monthly same store sales numbers for a $100 billion dollar company that has been in business for 75 years really matter? Is that granular level of information useful to an investor? Absolutely not. This is a company that has 35,000 locations and serves 68 million people every single day!! So sure, Johnny Stock Analyst and a few reporters that will lose a talking point are probably going to be upset about this, but in the grand scheme of things, visibility into those numbers is meaningless.
Today, anybody who wants to tell a story can find some type of data to support their claim, regardless of whether it is meaningful or not. It is important for serious investors to take a much broader view of their investments. Don’t get bogged down in the data of the day. Stay the course and avoid the noise.