No risk, no reward for Morgan Stanley

Alisa Roth Jul 22, 2009
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No risk, no reward for Morgan Stanley

Alisa Roth Jul 22, 2009
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Steve Chiotakis: Morgan Stanley reports second-quarter earnings today. Last week, Goldman Sachs and JP Morgan Chase both reported big profits. But the news may not be so good for Morgan Stanley.
Alisa Roth explains why.


Aslia Roth: Analysts expect Morgan Stanley to report that it lost more than $500 million last quarter. So why has it done so badly when its competitors have done so well?

Mark Lane follows the banks for the investment firm William Blair. He says Goldman and others went back to an old model: making risky bets on the markets. Morgan Stanley took a more conservative approach, and it’s paying for it.

Mark Lane: They pulled back from there, so they’re not generating the same type of revenue and earnings growth from trading that some of the other firms are.

Lane says Morgan Stanley’s also likely to get whacked by its commercial real estate business. It carries a lot of mortgages on its books, and many of those borrowers aren’t paying interest on those loans.

But analysts say things will improve for Morgan Stanley, and investors think so too — the company’s stock rose 25 percent this quarter.

In New York, I’m Alisa Roth for Marketplace.

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