Banks prove it again: buy the best, ignore the rest

Good morning!

Looks like it’ll be another great day in the markets … you know, aside from the 8% inflation, lower consumer spending, a looming housing crisis, rate hikes and politics.

All joshing aside, don’t let that stuff throw you.

There are still great companies out there putting up great numbers. And that’s what you want to focus on.

Speaking of which …

Here’s my playbook.

Banks prove it again, “Buy the best, ignore the rest”

JPM, one of the very best, crushed expectations. Turned in $3.12 a share beating estimates of $2.88 a share. Revenue of $33.49 billion, beating estimates of $32.1 billion. Both in terrible freaking markets and despite terrible conditions “everybody” said would crater the company. (Read)

Morgan Stanley, one of the rest, biffed it by posting sharp declines in investment banking and investment management revenues. CEO James Gorman said the bank was impacted by an “uncertain and difficult environment” and “challenging markets.” And JPM wasn’t??!!

Buy the best, ignore the rest. Your portfolio will thank you.

Apple vs NFL highlights a bigger investing picture

Apple looked like a sure-fire winner when it came to landing the NFL Sunday Ticket that’s belonged to DirectTV for years. Apparently, that deal’s hit a snag. The NFL wants to keep the same old structure in place, meaning local exclusivity and blackouts for games with hometown teams. Apple says pound sand and wants to be a partner. (Read)

The issue is much bigger. Apple is the future and the recently closed MLS (Major League Soccer) deal is a good example of where the company wants to go. (Read) Apple can stream every MLS game while networks can buy rights to stream ‘em. The NFL wants control pure and simple.

MyPOV: The NFL is a bunch of molly-coddled, tax-advantaged, pirates who have taken advantage of consumers for decades. They’d be foolish to shut Apple down. I wish I could short the league. Meanwhile, I hope I’m smart enough to buy more Apple.

Netflix: Of course there’s a catch!

Netflix is launching a new ad-supported plan in 12 countries. Under the plan, users will see 4-5 minutes of advertising per hour with each advert being 15-30 seconds long. (Read)

The catch. Those paying for Basic with Ads will NOT be able to watch everything because of what the company is calling “licensing restrictions.” Riiiiiiiiight. This is why I left CableTV.

Note to self. Cancel Netflix, continue to avoid the stock.

Mega-grocer not a buy, but one of their competitors is

Kroger is buying Albertsons for $34.10 a share in a deal worth $24.6 billion. The deal will create the second largest grocer by share after Walmart but ahead of Costco which is the third. (Read)

It’s tempting to jump on both stocks but COST remains the better buy, pun absolutely intended. High dividend, vertical cost control and membership-driven pricing and $1.50 hot dogs forever.

The grocery industry remains super fragmented, heavily discounted, and strongly regional. Being at the top of the food chain makes sense.

What Buffett is selling may surprise you

Normally people focus on what the Oracle of Omaha is buying, especially when the markets get stressed like they are now.

The more interesting question is what he’s selling. Berkshire Hathaway has reduced holdings in GM by 7.1 million shares this year, likely for the very same reasons I’ve repeatedly said to avoid it: parts shortages, supply challenges, labour costs, production halts and rising rates.

Investing is a constant balancing act. Berkshire still owns GM but he’s decided that at least part of that money can be put to better use elsewhere. Sounds familiar …

There are so many better choices out there! Upgrade to paid

Bottom Line

Stop buying crap stocks.

Now, let’s finish the week strong - you got this!

Keith