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Morgan Stanley: With A Transformation In Progress, Is It A Buy, Sell, Or Hold?

Jan. 01, 2022 9:08 AM ETMorgan Stanley (MS)30 Comments


  • Recent acquisitions are serving investors well.
  • The company has a sound financial foundation as well as a well-funded, rapidly growing dividend.
  • Morgan Stanley has excess capital that it can use for acquisitions or return to shareholders.
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If history is a harbinger of future results, then an investment in Morgan Stanley (NYSE:MS) will reap rewards: the shares of this investment bank nearly doubled the returns of the S&P 500 over the last ten

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This article was written by

Chuck Walston profile picture

As of 08/1023 I am rated among the top 3.4% of authors in terms of overall results. This is according to TipRanks, which provides a 64% success rate and an average 16.5% annual return for my articles. (I update this score on at least a quarterly basis for readers.)

I could be characterized as a safety first investor.  My primary focus is on dividend bearing stocks.  I seek a degree of safety in my investments by concentrating on companies with competitive advantages and strong balance sheets. 

I am a also value / buy and hold investor.   Since I require a discount in the share valuations of my investments, my  ratings are generally very conservative.  My valuation requirements, combined with the high quality companies that I often highlight mean many stocks I rate as a hold  perform well over the long term.   Readers should consider this when weighing my buy/hold/sell recommendations.  

I am a retail investor, with no formal training in investing.  

I am a graduate of the U.S Army Ranger school and a former member of the 1st Ranger Battalion and The Old Guard (U.S Army Honor Guard.) I am a retired law enforcement officer. I have approximately 20 years experience as a retail investor. 

Best of luck in your investments, Chuck

Analyst’s Disclosure: I/we have a beneficial long position in the shares of JPM, GS either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I have no formal training in investing. All articles are my personal perspective on a given prospective investment and should not be considered as investment advice. Due diligence should be exercised and readers should engage in additional research and analysis before making their own investment decision. All relevant risks are not covered in this article. Although I endeavor to provide accurate data, there is a possibility that I inadvertently relay inaccurate or outdated information. Readers should consider their own unique investment profile and consider seeking advice from an investment professional before making an investment decision.

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Comments (30)

Adambombfx profile picture
MS We are looking good Today !!!

SleepyInSeattle profile picture
MS: waiting to add @below $75 - it may get there.
Adambombfx profile picture
Bought an additional 100 shares of MS at $ 82.44 Today , Total shares held to date 800.

Adambombfx profile picture
Bought an additional 100 shares of MS at $ 84.14 Today , Total shares held to date 700.

Adambombfx profile picture
Just Bought an additional 100 shares of MS at $ 89.00, Total shares held to date 600.


@Adambombfx, added at 89 today too, tiny bit.
Adambombfx profile picture

Awsome ! smart move indeed ...
Adambombfx profile picture
I will be buying mor MS today !!!
Adambombfx profile picture
Just Bought an additional 100 shares of MS at $ 93.50, Total shares held to date 500.

@Adambombfx "just"? been a few hours since it was that low.
Adambombfx profile picture
Just Bought an additional 50 shares of MS at $ 95.55, Total shares held to date 400.

BM Cashflow Detective profile picture
I came into possession of Morgan Stanley shares through the Eaton Vance Merger.

In principle, I would have preferred to keep the Eaton Vance shares, but the price premium and the excellent performance of Morgan Stanley were, in retrospect, a very good deal.

I'm currently not buying any more shares here. A necessary price consolidation would do the valuation well. It's just a "hold" and I'm waiting for better entry opportunities.
jillydavid profile picture
Thanks for the article. Really good brief summary on MS. Been on my watch list and waiting for a good entry price which I estimate below 90.
" it is common to witness a degradation in a company's financial situation following acquisitions "

Often the acquirer pays a premium for a successful company and then "fixes" it without appreciating what made it successful in the first place. As an E*Trade client for decades, I can testify that since their acquisition their customer service has become a disaster. Their robot answering machine regularly reports that the wait time to speak to a human is on the order of an hour. Originally, they were a discount broker with excellent service. Now, with zero commissions, there's no longer a good reason to choose a broker with poor service, especially when there's a list of ways their on-line systems have been degraded to reduce their expenses and increase their float.
@JohnP, not sure what type of account you have but I have seen no change. have Schwab, ML, and etrade for 20 years. Like etrades format best.
When i call etrade I always get a live person.
Chuck Walston profile picture

Appreciate the inside scoop.
Thank you for a very good article. I’ve had MS on my watchlist for awhile.
Chuck Walston profile picture
@CP Lambert

My pleasure, and Happy New Year!
Thanks for a very good article. Gorman has done a nice job reducing risk and providing steady and predictable revenue streams (wealth management is a highly predictive model). Also, he has a shareholder friendly approach as evidenced by a recent doubling of their dividend and buybacks. Capital allocation is excellent as evidenced by accretive and complimentary acquisitions. The stock is a buy in a normal market, and under 90 a screaming buy. But when you factor market risk right now (Fed, inflation etc) I would agree hold is prudent. Long MS, C, BAC and JPM.
Chuck Walston profile picture
@User 286

I concur with your post.. Wishing you and yours a safe and Happy New Year.
@User 286
Agree… main reason to consider MS is the CEO… straight shooter, employee and shareholder friendly… but waiting for a 5-7 % correction before adding
thank you for your work in this article, and for your other work over the last several years. i have read and benefited from them all. for 2022, my view is that it will be a dicey investment year, but that a political change is a year off at which time things will become less dangerous for investors. for this reason, i am evaluating companies who pay a decent dividend and are relatively financially sound, and for which a 10% or more return can be obtained by selling the covered calls that expire in january 2023. my belief is that buying such a stock and selling this long-term call would allow an investment to span across whatever is going to happen in 2022. MS fits this profile. you can buy the stock in the high $90's, sell the january 2023 call at a strike price of $100, and make a return of more than 10% in 2022. although you rate MS a hold at this time, my guess is that your view on both the price of MS and their dividend a year or two from now would be rosier. seems like a relatively conservative investment approach with a good 12-month return to me, but i would appreciate your opinion. thanks again for all your articles.
Rob Ward profile picture
@abcde1 this gives you about 10% downside protection, but no guarantee of making money as the stock could easily go below the break even price of about 85/share with this strategy. I have considered this, but like the flexibility of weekly/monthly covered calls more.
Chuck Walston profile picture

I appreciate the kind words. As you have read a number of my articles, you know I hew towards the conservative side in terms of valuations. I'll also add that although I continue to invest, I'm keeping a double digit portion of my portfolio in cash to take advantage of dips. Rather than selling calls, I often sell puts on stocks that I would be happy to own at current levels. In toto, I earn the equivalent of about 3% to 4% of my portfolio each year from put contracts.
@Chuck Walston thank you chuck.
Nice article and completely agree. Too much risk going in to 2022 to purchase MS at these levels.
@atlasman, differs for everyone. Some may like a 2.8%+ yield and a CEO that likes the pps low for all the buybacks he's planned.
ndardick profile picture
Well done. You think deeply and write clearly. I am also neutral on MS at the current price but willing and ready to scoop some up on any decline below $90. While you own JPM and GS, I own JPM and C, betting that Jane Fraser will transform C so that it will trade above book value like the other large banks. I am keenly aware of the history of C and its ongoing challenges, but it’s time is now and the price simply too cheap to ignore.
Chuck Walston profile picture

I appreciate the kind words. I have no position in C, but you have prompted me to take a look at it. I agree with the $90 valuation as a buy point.
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