MorningWord 4/26/16: Lost Decades – $GS, $MSFT…$AAPL?

by Dan April 26, 2016 9:44 am • Commentary

Yesterday on CNBC’s Fast Money, infamous bank analyst Dick Bove was critical of Goldman Sachs’ (GS) CEO Lloyd Blankfein. In particular, he criticized Goldman’s inability to react to new regulations since the financial crisis. That failure has resulted in a deterioration in their business model a lost decade for their stock, basically flat in that 10 year period. Watch here:

The New York Post followed up, and I found the last bit of this quote from Bove on point:

The 1o year chart of GS is fairly fascinating, basically in line with where it was 10 years ago, but also very near the mid point of the pre-financial crisis highs of $250, and the post financial crisis lows of $50:

From Bloomberg
From Bloomberg

Lost decades are not the end of the world for high quality best of breed companies. Yeah, it sucks during that decade as a shareholder. Like shares of Microsoft (MSFT) whose stock essentially traded between $20 and $30 for decade after the dotcom bust, before taking off when CEO Steve Ballmer was ousted in early 2014:

from Bloomberg
from Bloomberg

Are there other best of breed/ high quality stocks that could enter a long period of consolidation? There are many attributes about Apple’s (AAPL) current business, management and capital structure that could cause the stock to spend years in a range-bound state. Any re-tracement back to the long term uptrend in the mid $80s could confirm that theory and be the start of long consolidaion:

From Bloomberg
From Bloomberg

But that’s something to watch for the long term. In the really near term, AAPL reports tonight. Check back later, we will have a detailed preview of the event, but I had some initial thoughts in this space yesterday, here.