• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing

Don't Be Fooled by the Stock Hucksters

Make sure you are taking advice from those who have played the game, not those who are attempting to play you.
By JIM COLLINS
Dec 01, 2022 | 01:30 PM EST
Stocks quotes in this article: CRM, MS, XOM, CVX

In researching Salesforce (CRM) , which is plunging after soft revenue guidance and the news of the departure of co-CEO Bret Taylor, I came upon this doozy of a double run-on from something called AlphaCurrents issued by Morgan Stanley (MS) :

What a difference a year makes. At the onset of 2021, investors clamored to own growth stocks as low rates, rising retail investor participation and optimism that the pandemic had fundamentally accelerated opportunities for innovative businesses fueled historic speculation across the thematic growth equity universe. 2022 has seen something close to the opposite: A tightening Fed has put pressure on valuations, retail enthusiasm for stocks has subsided and concerns are growing that there could be some give-back of pandemic gains from many of the thematic outperformers of the past two years.

Indeed. Thank you! Morgan Stanley is always the Captains of the Obvious, but the key point to note there is that that report was issued February 16, 2022. So, with that backdrop, Shouldn't Morgan Stanley Wealth Management have been advising its clients to avoid equities? Hahahahhahaha. Yeah, that was a jokingly rhetorical question.

Apart from their incredibly brave Equity Strategist, Mike Wilson - who yesterday called for a severe plummet in the S&P 500 in 1H23 to between 3,000 and 3,300, which would represent a 20% decline from today's level - Morgan Stanley never does anything but push stocks on retail investors. Push, push, push.

And MS isn't the only firm that does that, but their ratings system is a dead giveaway to their motivation. Of the tech-heavy cohort of 30 stocks listed in the disclaimer to that AlphaCurrents report, 21 were rated as overweight. That was obviously an extraordinarily bad call given the performance of the Nasdaq since February 16th.

But I am not here to bash Morgan Stanley. I am here to bash the idea that some stocks should be overweighted or equally-weighted in your portfolio. In my 31st year of following stocks professionally, I can tell you the idea of constructing your personal portfolio by assigning relative weightings based on the sectoral weightings of the S&P 500 is a really, really dumb way to optimize your finances.

What absolute, utter nonsense.

That idea of relative portfolio-weighting assumes you should own stocks as institutions are forced to. Yes, forced to. Asset allocations are the way in which institutions attract and retain clients.

But you don't need to attract clients, you are one. That is the existential problem with believing the sell-side. The word "sell" is key, and I know this from having worked on the sell-side for more than a decade in London and New York for Lehman, DLJ and UBS.

There is just no reason you have to own stocks. Think for yourself, man. And if that thinking convinces you that rising interest rate environments are awful times to own Big Tech stocks, then you are already ahead of the game. And Morgan Stanley.

So, don't be fooled by the hucksters. If you own Exxon Mobil (XOM) and Chevron (CVX) , as my firm does, you would be crazy to sell them now and interrupt that stream of dividends.

Other than energy? It's just not the right time to have a weighting in so-called growth sectors, and every professional fund manager that I know is re-weighting their portfolios away from Big Tech and toward Big Oil. Bye-bye Elon, hello Mike Wirth.

That's how the game is played. Just make sure you are taking advice from those who have played it, not those who are attempting to play you.

Thus ends today's sermon. Happy December!

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Jim Collins' firm owned XOM, CVX.

TAGS: Investing | Markets | Stocks | Trading | Consumer

More from Investing

You Don't Have to Trade All at Once

James "Rev Shark" DePorre
Sep 23, 2023 10:00 AM EDT

Trading in multiple time frames not only reduces risks, but also provides strategic flexibility. Let me show you what I mean and how to do it.

This Dividend Aristocrat Has All the Raw Materials to Make It a Top Pick

Bob Ciura
Sep 23, 2023 7:30 AM EDT

This name has been down, but now I think it's charged up to cruise into the year's end.

The Bears Just Moved Into Wall Street

James "Rev Shark" DePorre
Sep 22, 2023 4:26 PM EDT

Technically, the bears are in control of this market now.

3 Overlooked Mid-Cap Stocks With High Dividend Yields

Bob Ciura
Sep 22, 2023 3:00 PM EDT

There are strong dividend stocks in this 'middle' category worthy of consideration for income investors.

Don't Be a Sap and Step Into a Value Trap

Bret Jensen
Sep 22, 2023 12:30 PM EDT

There are plenty of stocks that look like value plays but aren't as the market continues to drag more share prices down.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 12:20 PM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    Trading in Multiple Time Frames
  • 10:24 AM EDT BRUCE KAMICH

    This Could Get Messy

    A number of key stocks are getting close to import...
  • 01:41 PM EDT CHRIS VERSACE

    Latest AAP Podcast With Helene Meisler!

    Listen in as the Action Alerts PLUS podcast talks ...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2023 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login