Hope springs eternal with the New Year, because we somehow learn to expect great things from ourselves. By January 1, we make resolutions to do better, feel better, and better manage our lives. By March, we're usually screwed. Sometimes it doesn't take three months before we flub up, mess up, and destroy all our good intentions. In my opinion, if we worked our resolutions like the stock market, we'd have a better go at our promises to ourselves. Instead of once-a-year resolutions, we could reevaluate our goals every three months, just like any company trading on the market.

Of course, not every company begins its fiscal year (FY) like we do. They may begin a fiscal year in March, June, or August. They may structure their fiscal year on a quarterly (Q) or semiannual (SAN) basis. Since we're just beginning with this concept, we'll begin our annual fiscal year now, and by next January 2005 we'll be at F1, or our first fiscal year, January 2006, we'll be at F2, and so on.

Before our year begins, we want to sit down and take stock of how we (the company) are faring. Do we want to stop smoking? Quit drinking? Improve our portfolios? Stick to the budget? Let's outline all our goals, as we are not the only ones who will benefit from these improvements. We have bosses, employees, children, or significant others who will appreciate and applaud our investment in ourselves. They will proclaim their loyalty in us, and we - as the equity - will seem to increase in value in their eyes.

Now we need to make our first quarterly report (10-Q or 10-K). Every quarter we reevaluate our progress and make another report. If we were a company, we would provide financial information and other selected materials that are not audited. As individuals, we may need to include much more (or much less!), and our audience will have to accept that what we say is true, as our facts are also unaudited. Yes, we have to share our goals, or this won't work. We're going public, so to speak. The people we share our goals with will become our analysts.

At this point, we want to go for our analysts' ratings. If this analysis was conducted in real life, the analysts would provide forecasts based on earnings per share, revenue, cash flow, long-term growth projections and stock recommendations. Market analysts use a standard maintained by I/B/E/S or Institutional Brokers Estimates System, and they are assigned a numeric value. The final results look like this:

1. Strong Buy
2. Buy
3. Hold
4. Underperform
5. Sell

In our individual cases, our analysts might base their rating on our prospects for success with each goal we make. Analysts can change their ratings daily. So, if we have a few very interested analysts, we can tell where we stand on any given day with their perceptions of our progress. To make this even more fun, our analysts can submit quarterly, annual, and long-term growth rate estimates. If we are rated very low, let's not take this personally. When Cora gives me a "4" on my prospects for success on any given goal, I use this low rating as a motivation to show her that I can do better than she expected. However, I learned she's old enough to understand the term "reverse psychology," so I'm on the hunt for more impartial analysts.

What happens if we oversell our ability to reach our goals? Uh-oh. You know what this means, don't you? Either we will kill ourselves as we try to meet expectations this quarter, or we will fail miserably and our ratings for next quarter will fall dramatically. This, of course, will take the pressure off, but we might lose interest from any one of our analysts. Yes, this seems callous. However, remember that analysts never really lose interest. They just wait until the company shows some real progress in any direction. This could happen in any given quarter with a new 10-Q.

Think about the possibilities, though. This means each quarter we have a chance to redeem ourselves. We can reduce our goals so they're easier to meet, or we can change our goals completely. However, if we go too far in either direction, we may lose our analysts' faith. This is where a good board meeting would come in handy. If we had a CEO, a COO, and a fee-based financial planner on our board, we might fare a little better in reaching reasonable goals. Still, every three months we have a chance to modify our objectives and start over again.

At the end of the first year, or F1, we make an annual report, based on the information we have in our past 10-Qs, and provide our analysts and other interested parties with our future goals. For a real-time example of 10-Qs and annual reports, just find the website of the company that holds your interest, and they should have these reports posted for their investors.

In the meantime, we can anxiously await the real quarterly reports that will trickle out this month. At that time we will see how the retail market really fared this past holiday season, and watch as the analysts change their ratings for any given company. Next week we'll take a closer look at these quarterly reports and how they contribute to market volatility.

Until Then,
Linda Goin