The discussion about quarterly reporting for US listed companies is ongoing, with some suggesting a switch to biannual reporting. Donald Trump recently shared his support for this change, highlighting the benefits of a focus on long-term management. In a post on his social media platform, Truth, Trump proposed changing from quarterly to six-month reporting. He believes this shift could reduce costs and allow managers more time to focus on running their companies.

China’s Long-Term Management Strategies

This proposal is similar to China’s long-term management approach, which considers plans that last from 50 to 100 years. Trump supported this idea during his first term and has remained consistent on the issue. As discussions about semi-annual reporting gain traction, the focus is on the uncertainty it creates. Although SEC approval will take time, just the discussion can lead to market fluctuations. Last week, the VIX, which measures market fear, closed at 17.8, slightly higher due to this news among institutional traders. If this change happens, it would significantly alter the volatility we experience in trading. Instead of four predictable earnings seasons each year, there would be two major and high-stakes reporting events. This could make buying longer-dated options a more appealing strategy to manage the increased uncertainty between reports. It’s essential to remember that we’ve seen this proposal before, particularly in 2018. Back then, the SEC examined the idea, but it didn’t gain enough support to become a policy, reminding us that changes in this area can be slow. For now, traders should focus on political headlines rather than expecting immediate changes in market structure.

Impact on Sector Volatility

Switching to six-month reporting would not affect all stocks in the same way. We can expect growth-oriented sectors like technology to experience increased volatility, as these companies often see rapid changes and investors need frequent updates. In 2024, tech stocks averaged a price swing of 6.2% on earnings days, and this number could rise with less frequent reporting, making strategies like straddles more attractive. Looking at international examples, the US is not the first to consider this switch. The European Union eliminated its mandatory quarterly reporting in 2013. Their markets adapted by depending more on other corporate communications and analyst reports. This transition happened without significant disruptions, suggesting the potential impact might not be as severe as current discussions suggest. Create your live VT Markets account and start trading now.

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