Morgan Stanley released a note this week announcing that midstream energy stocks might go up. Might. Could. The firm deployed the phrase "outsized upside" which is Wall Street's way of saying "we have no f*cking idea but we need you to trade so we collect fees."
Midstream energy plays are the pipelines and storage facilities that move oil and gas from one place to another. Thrilling stuff. The kind of companies your dad owns in his Roth IRA because a guy named Brad told him they were "defensive dividend plays" at a backyard barbecue in 2009.
Morgan Stanley did not specify which midstream stocks. They did not provide a price target. They did not explain what "considerable upside" means in actual dollar terms. They just said some energy stocks that pay dividends could go up sometime soon. This is analysis you could get from a Magic 8-Ball if you shook it near a Bloomberg terminal.
The beautiful part is retail traders will read "outsized upside" and immediately start buying call options on something they cannot pronounce. They will confuse Enterprise Products Partners with the car rental company. They will ask their broker if Kinder Morgan is related to Captain Morgan. They will lose money in ways that defy the laws of thermodynamics.
Dividends exist to convince boomers that stocks are savings accounts. Energy dividends exist to convince boomers that Exxon cares about them personally. Morgan Stanley exists to convince everyone that somebody somewhere knows what happens next. None of these things are true.
The corner they mentioned is probably around the same corner where my dad said we would find a gas station thirty miles ago in the middle of Nevada with the tank on empty.
Photo by Sven Piper on Unsplash
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