Investing Strategies

Reuters | |

Morgan Stanley posted an about 57% rise in fourth-quarter profit on Wednesday, as the Wall Street bank’s trading business benefited from coronavirus-induced volatility in financial markets.

Net income applicable to common shareholders rose to $3.27 billion, or $1.81 per share, in the quarter ended Dec. 31, compared with $2.09 billion, or $1.30 per share, a year earlier.

Analysts had expected a profit of $1.27 per share, according to Refinitiv IBES data.

Reuters | |

Goldman Sachs Group Inc dwarfed estimates with a 153% jump in fourth-quarter profit on Tuesday, powered by another blowout performance at its core bond trading and underwriting business and an uptick in merger and acquisition activity.

The bank’s net earnings applicable to common shareholders rose to $4.36 billion in the quarter ended Dec. 31 from $1.72 billion a year ago. Earnings per share rose to $12.08 from $4.69 a year earlier.

Analysts had expected a profit of $7.47 per share on average, according to the IBES estimate from Refinitiv.

Reuters | |

Outsized bets on large U.S. technology companies and emerging cryptocurrencies fueled the year’s top-performing U.S. mutual fund and exchange-traded funds as the coronavirus pandemic upended global markets, while funds that bet on oil and gas companies fell nearly 100%, according to data from fund-tracker Morningstar.

The year was a challenge like few others for the $21.3 trillion mutual fund and $4.4 trillion ETF industry. U.S. stocks plunged in March before staging a more than 60% comeback, while bond yields hung near record lows for much of the year after unprecedented moves by the Federal Reserve to backstop the financial markets and keep interest rates low.

Reuters | |

Securities regulators in Massachusetts were expected to file a complaint on Wednesday against Robinhood Financial LLC, according to a document reviewed by the Wall Street Journal, the newspaper said on Wednesday.

The administrative complaint reviewed by the Journal from the enforcement arm of the Massachusetts Securities Division said the popular trading platform violated state laws and regulations by failing to protect its customers and their assets.

Reuters | |

The U.S. economy is more resilient than many think, giving equities room to rise further while benchmark Treasury yields will likely lift to over 1.25% next year, said Rick Rieder, BlackRock’s Chief Investment Officer of Global Fixed Income.

U.S. government stimulus and Federal Reserve monetary policy are helping cushion the economy from the slump during COVID-19 and businesses operating virtually have posted productivity gains, Rieder said at the Reuters Summit. U.S. economic growth rebounded in the third quarter as more than $3 trillion in government COVID-19 relief helped millions of unemployed people cover expenses.

Reuters | |

Airbnb Inc is aiming for a valuation of nearly $35 billion in what will be the last blockbuster U.S. IPO of the year, marking a stunning recovery in its fortunes after the home rental firm was ravaged by the COVID-19 pandemic earlier this year.

Founders Brian Chesky, Joe Gebbia and Nathan Blecharczyk will together sell nearly $100 million worth of shares in the company’s Wall Street launch, 13 years after they founded a website in a loft that went on to revolutionize the hotel and holiday home industry.

Airbnb struggled in the immediate aftermath of the pandemic as travel came to a grinding halt. It had to lay off a quarter of its workforce and seek $2 billion in emergency funding from investors, including Silver Lake and Sixth Street Partners.

David Nelson, CFA CMT | |

On Tuesday, November 24th, the Dow Jones Industrial Average closed above 30,000 for the first time. That's a long way from its first close of 40.94 May 26, 1896. Today's Dow looks a lot different than the original 12 companies. Even General Electric was kicked out of the index in 2018.

Reuters | |

As U.S. stocks scale fresh record highs, investors are trying to gauge whether next year’s projected profit rebound will be strong enough to add fuel to the rally.

Analysts are projecting that earnings for S&P 500 companies will rise 23% next year after falling more than 15% this year due to the coronavirus pandemic, according to IBES data from Refinitiv.

Yet stock prices have already staged a massive recovery from the March lows of the pandemic, with the S&P 500 index rising more than 60% from its bottom to its recent record highs amid progress toward a COVID-19 vaccine and hopes for a speedy economic recovery.

Reuters | |

BlackRock, the world’s largest asset manager, has upgraded U.S. equities to “overweight”, turning bullish on quality large cap technology companies as well as small cap firms that tend to perform well during a cyclical upswing.

The asset manager said it prefers the United States as it “boasts” a higher share of “quality” companies with strong balance sheets and free cash flow generation in the high-flying tech and healthcare sectors.

The resurgence in virus cases in Europe and the United States could lead to further outperformance of large cap tech and healthcare companies, it added.

Reuters | |

Warren Buffett’s Berkshire Hathaway Inc said on Monday it has begun investing in the stocks of four large drugmakers, betting on an industry that could benefit when the world begins emerging from the coronavirus pandemic.

In a regulatory filing detailing its U.S.-listed stock holdings as of Sept. 30, Berkshire disclosed $5.7 billion of new healthcare stakes, including more than $1.8 billion each in Abbvie Inc, Bristol-Myers Squibb Co, Merck & Co and $136 million in Pfizer Inc.

Shares of the drugmakers rose in after-hours trading.

The filing signals where Buffett and his portfolio managers Todd Combs and Ted Weschler see value. Buffett normally handles large investments for Berkshire’s $245.3 billion stock portfolio himself.