Seriously, can someone help me understand why Morgan is down so sharply when compared to the other financials.
I understand that it is a tough market. This just doesn't make a whole lot of sense to me.
MS has been trending down for a while. A look in the stockcharts for the past year will clearly show it. Now, let me clear some misconceptions. It is not shorts driving MS down. You cannot drive a stock if it is good as there would be buyers stepping in to buy it!
MS has the toxic level III assets which is another term for huge mortgage losses on its books. The amount is $60 billion. It came out with a very nice earnings report this past quarter but, the $60 billion in losses was not even mentioned or footnoted in the earnings report. Add to that the shorting ban, harassment of hedge funds by the SEC, boycott of MS and other financial stocks by amateur shorts, so you have a pool of buyers made up mostly of amateur long investors and traders and not enough of them. In addition, lots of MS holders have huge losses. Amateur longs tried to drive share prices up since, Friday but, they failed and now, most of those investors and traders from Friday, Monday, Tuesday and today Tuesday are sitting on losses. A number of them substantial losses! Even $1 drop causes more pain as the losses mount so, the smart ones try to get out with the least losses! Those MS shareholders who wish and hope will be the biggest losers as this stock has a lot of downside pressure right now. Do your own diligence and you will be better off! Do not listen to talking heads on TV, analysts, politicians, CEOs especially as they lie, message board posters who have no clue of how the stockmarket works. I tried to make the picture as clear as I can for you and hope that helps you.
First, I didn't know you were a female named John, second MS is down because of the shorts and naked shorting as was stated in the recent past that they are the ones who kept the prices low.
You must not believe in technical analysis as a driver of share price. Believe it or not though, technical analysis is right more often than not. A 15 dollar run up that stalls will inevitably fall back 50 percent. If the long term outlook is bullish this 2 steps forward 1 step back pattern is the most common bullish advance. The point is no one their right mind should have been buying when it was clearly topping out near 30, except shorts forced to cover by margin requirements. That is the bullish case.
On the bearish side, I am sure some people believe it will retest the lows before making any sustained move higher. I doubt we are going to see that either.
My bet is on volatile range trading between 20 and 30 for the next couple months, basically bouncing around book value of the sharess.
Easy to explain: MS, before the ban on short selling and the proposed bailout, was next to go down. There were only two IBs yet to "go down": MS and GS. MS was going to go first, and then GS. That's when GS's former CEO Paulson said enough was enough to stop the bleeding, and he proposed the bailout plan.
Now that the bailout plan looks like it might not be passed, and if passed, will be watered down, meaning that MS is yet likely to go down. Remember, it was GS (not MS) that Buffett put $5 billion into -- and even then, it was in his favor.
I think it's obvious why MS is down, and why it will be down further tomorrow. If things don't look good by Friday a.m. for the bailout bill, this weekend we will see yet another IB (this time, MS) fail.
Paulson/Bernacke will be able to say they did all they could and leave the disaster to a Democratic Congress -- though it was the Republicans that spearheaded the negativity.
thanks for the explanation. I was wondering why they are going down when the earnings are so strong. I have never seen stocks go bankrupt with good earning like this. Very strange. Do you have any idea why this is happening. I put a small chunk of change into GS, very small.
Because of people going long GS and shorting MS, and probably because people are figuring out that there isn't going to be any big beneficial bailout, but a slow painful one that dilutes the companies that need it. It's an election year. Taxpayers vote, so taxpayers will get equity. Those are my opinions on why it is down today. I am short MS and own puts.