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Thursday, December 20, 2007

Morgan Stanley (MS) thoughts . . .

This is not for the small funded $500.00 accounts, but for my other larger investment portfolio.

I picked up some Morgan Stanley the other day at $50.52. This is a long, long term play. Looking forward, Morgan Stanley is one of the single largest investment banks in the world. I had figured a few days ago that if they blow earnings, then I'd wait for the price to congest and consolidate and then on any of that strength, buy another 10x the number of shares to dollar cost average out my position.

Funny. They did blow earnings, but on news that China stepped in with a 4 billion dollar stake in Morgan Stanley, shares shot up. So at this point it's just wait and see. I have my DRIP (Dividend Reinvestment Program) turned on with my MS shares, so any dividends I receive will automatically purchase me more shares, without having to worry about the commissions. Their payout ratio is only 13%, it's held 72.4% by other institutions, their EPS is $7.38 and one of the largest investment banks in the world right now as a P/E of what? Yeah . . . Six.

Mind you, the news right now is not good. The securities firm posted a net loss from continuing operations of $3.59 billion, or $3.61 a share, in the quarter ending November 30. That is huge. A year earlier Morgan Stanley had income from continuing operations of $1.98 billion, or $1.87 a share. But as I mentioned, China stepped it with just a large a stake in the company.

Who was it that said: "May you live in interesting times"?

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