Q+A: 10 lessons for investors from reporting season

Welcome to Fear and Greed Q&A, where we ask and answer questions about business, investing, economics, politics, and more. I'm Michael Thompson, and the FY26 reporting season is all done, so it's time to take a look back at what we've learnt across the last four weeks. Roger Montgomery is the founder and chief investment officer at Montgomery Investment Management, and he has put together his list of 10 lessons from reporting season. Remember, this is general information only, and you should seek advice tailored to your circumstances before making investment decisions. Roger, welcome back to Fear and Greed Q&A. Great to be with you, Michael. All right. We've got 10 lessons to get through and only about 10 minutes to do so. So let's get cracking. We won't need that long. Oh, well, I tell you what, there are some interesting things that have cropped up across the last few weeks, right? And the thing is that FY26, and this is really your first lesson, FY26 was better than a lot of people had feared could have been the case. But the question now is looking ahead.

Yeah, look, on the surface, I think nominally it was better, but maybe it wasn't actually as strong as it appeared. So aggregate profits rose between 11% and 12%, about 11.6%. But if you take mining and energy out, growth was only 5.3%. And only 36% of companies beat expectations. Usually it's about 40. So it's fewer than normal number of companies that beat market expectations. So it was better than feared, but it wasn't a broad earnings boom.

Yeah, and that is really the lesson number two then, that that headline's earning recovery was narrower than it appeared to be.

Yeah, that's exactly right. And look, there's a host of reasons for that. I mentioned that a lot of the heavy lifting was done by a particular group of companies. But also we saw, for example, in the retail space, some companies did quite well through promotions where others didn't. JB Hi-Fi did better and Nick Scarley did better than Harvey Norman. And that was partly because of a domestic focus rather than a drag from overseas operations in the case of Harvey Norman. But then the counter to that is Nick Scarley was also is also expanding into the UK and going very well over there. So Harvey Norman's followed them in there, but not going as well. So when you take out the sectors that did the heavy lifting, you find that it was more nuanced everywhere else.

The third lesson was something that we were observing almost every day on fear and greed, where we were having this volatility in share price reactions afterwards. And it was really not so much based on the result that had been reported, but it was really focused on the guidance.

Yeah, so that was a big issue. Markets tend to look through the current year's earnings because they're over. And what we say is the market tends to cast its shadow before it. So the market largely looked through those numbers that the company had already delivered and focused on the guidance, as you said. And what we saw was that FY27 earnings fluctuated. forecasts have been cut by around 2% during the season. So as we head into the new year, there's probably less economic assistance and more