Morgan Stanley published a list of stocks you should buy before earnings. Before it's too late, they clarified. Too late for what exactly? Too late to buy at today's price before tomorrow's higher price? Incredible work.
The premise here deserves examination. A major investment bank analyzed companies. Found upside. Then told you about it. In public. For free. Through financial media outlets read by millions of people including every algorithm on Wall Street. And they expect this information to retain value between the time you read it and the time you smash that market buy button.
These stocks "due to report soon" apparently have "plenty of upside ahead." Due to report soon means the actual numbers are days away. Plenty of upside means Morgan Stanley ran a discounted cash flow model, applied a target multiple, and arrived at a price target higher than current market value. None of this accounts for the fact that Morgan Stanley's clients with actual money got this report yesterday. Maybe last week. You're reading about it after it passed through compliance, media relations, a journalist, an editor, and the entire internet.
The beautiful part is the urgency. Before it's too late. As if there's a countdown clock on publicly traded equities. As if shares have an expiration date like grocery store sushi. Buy now or forever hold your SPY.
Retail traders will read this headline and feel something. That feeling has a name. It's called being late. They'll buy anyway. Morgan Stanley will publish their next quarter's earnings. They'll beat on trading revenue. Some of that revenue came from the spread on your panicked market order. The analyst who wrote this report will get his bonus. You'll get your shares. Three percent higher than yesterday's close.
Morgan Stanley says buy before it's too late, which really means it was too late the moment you heard about it.
Photo by Sven Piper on Unsplash
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