This bank just proved everyone wrong.
What’s happening?Yesterday, we talked about the focus of the week -bank’s earnings. JPMorgan Chase started the week off with a stumble – feeding into the negative narrative around the banks. And truthfully, the narrative makes sense. Because most banks have set aside billions of dollars in preparation for expected loan losses, this paired with the shockingly low-interest rates doesn’t bode well for bank profits.
But one bank just shocked everyone by posting its best results in years.
Goldman Sachs blew expectations out of the water. And much of this was because it relied on trading and investment banking despite the pandemic’s volatility. The bank reported $2.42 billion in profit, or $6.26 a share, destroying the $3.78 a share estimate that analysts gave. It was the bank’s best earnings outperformance in nearly a decade.
Where’s the money?As soon as this 41% surge in revenue hit the airwaves, investors began to throw their money at the stock. In turn, we saw the stock move upwards, nearly hitting $225 at one point. But as the day went on, we saw the stock slowly drop – almost to the previous close.
This doesn’t come as a surprise to me, however.
As we talked about yesterday, investor focus isn’t on the banking sector. And hot short stocks like Netflix, Amazon, and Tesla are currently the apple of investor’s eyes. So, while a good earnings report did draw attention – it wasn’t enough to hold it.
But for me, I’ve had my eye on the banking sector for a while. And Goldman Sachs earnings just reminded me why. Because while this sector is beaten down – I believe it’s still a viable investment.
And here’s how I plan to play it…
How can I get some?With the current market trend, we’re in a buy the dip and sell the rally kind of mentality. And this is why despite the good earnings reports – I expected the stock to sell off no matter how good the numbers were.
But the thing about the banking sector is despite the current climate; the numbers banks have been posting have been, and continue to be, substantial. And that’s why I won’t be selling on this rally, and I don’t think you should be either.
Truthfully, you could buy any bank right now and profit in the long term.
You could buy stock or options, whatever suits your trading style – because, either way, the profit potential is there. But the vital thing to remember is that there will be volatility. The banking sector is probably one of the more volatile sectors you could be in right now. And I don’t see this volatility going anywhere until we are post-election in November. But the important thing to remember is that short term volatility doesn’t mean much when it comes to this kind of setup because we’re focused on banks for the long term.
And that’s how you can win big in the banking sector.
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In the Spotlight: This automobile makerFord Motors has officially unveiled its newest model of an American favorite, The Ford Bronco. After years of consumers asking the automobile company to bring it back – it’s here. And it has consumers excited.
Ford produced the original Bronco models from 1965 until 1996, and it was one of the company’s best sellers. But the new Bronco comes with all the bells and whistles the original model didn’t bring to the table – including the option to have a four-door Bronco when the original only offered a two-door model.
But the most impressive aspect of this newest model is that it is expected to bring nearly $1 billion to Ford’s North American pretax earnings if sales hit 125,000 units. And I don’t know about you, but that kind of number catches my eye.
Presales have started – and spots have been filling quickly – so, I feel we could see that $1 billion roll in easily and maybe even more. And that’s why Ford is officially on my radar as a next excellent investment.
So, I’ll be keeping you updated. Stay tuned.