Is sb/ms the place to be now?

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Feb 20, 2009 8:50 pm

with the big banks screwing brokers it seems the only place to be now is indi or at sb/ms, the last standing wirehouse.   its amazing how the pendulum has swung in the last few months.  any comments on how guys are feeling at sb/ms.  im sure a lot of bank brokers and wachovia securities guys are looking to move sb/ms now.  hows the platform, morale, and recruiting package looking as sb/ms now and are the packages the same for both since they are integrating the companies together?

Feb 20, 2009 9:35 pm

Seriously?

Ray Jay, Stifel etc etc...there are PLENTY of better options

Feb 21, 2009 9:48 am

I can tell you that morale is at an all time low.  Everyone is looking to move and wishing they had done it months ago.  Platform is ok.  Nobody knows who will be left on this ship after the mass exodus in the next few months.  My guess is the small age discriminating retention package is aimed at moving the numbers down from 22000 FA's to 14000 FA's.  Based on my experience this forum has been much more acurate than local or regional management.  They are stumbling around in the dark most of the time.   I would not believe a word they say. 

Feb 21, 2009 10:07 am

ms only became "friendly" toward brokers because their other business collapsed. they became a bank to survive. when i worked there, the brokers were shit and institutional was the only was to make money. this sb aquisition is their last chance to survive.

do yourself a favor and look regional or independent.  I worked there 17 years, then went regional(best 3 1/2 years of my life). we have been bought out by RBC and we are in the middle of integration now.
I will give you one last word of advice. most clients could care less about the name smith barney, morgan stanley, merrill lynch, ubs, wellsfargo/wachovia/firstunion/prudential/wheatfirst/interstatejohnsonlaneectect.
the only reason tho stay at  a whorehouse, i mean wirehouse bank(MS is a bank, not an investment bank) is if you need complex institutional products that most individual investors do not need. My regional firm did everything i need and actually had more retail products to offer.  they did not haircut me on commissions. ( morgan paid less on UIT's, annuities, syndicate(when i worked there) and would give you terrible bids on bonds because they had profit centers in each department that would take part of your pay to make profit for their department) i did not need access to currency trading, cdswaps, ect.
the twenty one  years i have been i business all i would hear about is how great merrill is. merrill is gone........
think for yourself. dont believe the big firms hype. go regional or find some people to go independent with and create your own legacy firm
Feb 21, 2009 6:45 pm

If you feel you fit best at a large wirehouse,  MS is the place, if for no other reason than default. Ignore the "morale is low" stuff and the comments of people who left 3 1/2 years ago when Gorman first came on board and started cleaning house. Morale is high, or as high as it can be in this market. The force likes Gorman and loves John Mack. At the end of the day, what matters most is the environment in your particular office and that varies a great deal.

 
Having said that, wirehouse are wirehouses and you may want to look at regionals and independents. Personally, I think the regional guys oversell their position, but that's for you to explore.
 
One word of caution. If you're a smaller producer, you probably want to avoid wireshouses, including MS. I think the way of the future is a continuation of the process of hiking up of the penalty box minimums, making guys at $400k and below feeling unloved. That may someday also extend to regionals, they're getting swallowed up one by one, and they aren't immune to that math that makes a broker production breakeven point at 300-350-400k. 
Feb 21, 2009 6:58 pm
today1:

with the big banks screwing brokers it seems the only place to be now is indi or at sb/ms, the last standing wirehouse.   its amazing how the pendulum has swung in the last few months.  any comments on how guys are feeling at sb/ms.  im sure a lot of bank brokers and wachovia securities guys are looking to move sb/ms now.  hows the platform, morale, and recruiting package looking as sb/ms now and are the packages the same for both since they are integrating the companies together?

 
Do the math on the interest/ debt service they have to pay to Mitsubishi/Treasury and the company does not make enough to cover it at current earnings estimate.  Would not get too carried away talking about long term where the best place to work is in this situation.
 
The Jan 2011 2.50 and 5.00 puts are trading at .70 cents and 1.40..If the market improves maybe they will be ok, if it stays here or goes down thats probably it.
Feb 21, 2009 7:15 pm
Conrad Dobler:

If you feel you fit best at a large wirehouse,  MS is the place, if for no other reason than default. Ignore the "morale is low" stuff and the comments of people who left 3 1/2 years ago when Gorman first came on board and started cleaning house. Morale is high, or as high as it can be in this market. The force likes Gorman and loves John Mack. At the end of the day, what matters most is the environment in your particular office and that varies a great deal.

 
Having said that, wirehouse are wirehouses and you may want to look at regionals and independents. Personally, I think the regional guys oversell their position, but that's for you to explore.
 
One word of caution. If you're a smaller producer, you probably want to avoid wireshouses, including MS. I think the way of the future is a continuation of the process of hiking up of the penalty box minimums, making guys at $400k and below feeling unloved. That may someday also extend to regionals, they're getting swallowed up one by one, and they aren't immune to that math that makes a broker production breakeven point at 300-350-400k. 
 
I never thought we'd see the day when MS was the best place to be.
Feb 21, 2009 9:07 pm
fritz:
today1:

with the big banks screwing brokers it seems the only place to be now is indi or at sb/ms, the last standing wirehouse.   its amazing how the pendulum has swung in the last few months.  any comments on how guys are feeling at sb/ms.  im sure a lot of bank brokers and wachovia securities guys are looking to move sb/ms now.  hows the platform, morale, and recruiting package looking as sb/ms now and are the packages the same for both since they are integrating the companies together?

 
Do the math on the interest/ debt service they have to pay to Mitsubishi/Treasury and the company does not make enough to cover it at current earnings estimate.  Would not get too carried away talking about long term where the best place to work is in this situation.
 
The Jan 2011 2.50 and 5.00 puts are trading at .70 cents and 1.40..If the market improves maybe they will be ok, if it stays here or goes down thats probably it.
Feb 21, 2009 9:24 pm

I wouldn't let the put options out 10 months on the 2.50 and 5 worry me too much, the 20 and 25s are trading at $8 and $11.50.  The cash flow is enough to cover current debt.

Feb 21, 2009 9:39 pm
Conrad Dobler:

I wouldn't let the put options out 10 months on the 2.50 and 5 worry me too much, the 20 and 25s are trading at $8 and $11.50.  The cash flow is enough to cover current debt.

 
Over 2 billion/year on the preferred dividends.. If you add bond debt, they have no room for error. 
Feb 21, 2009 10:10 pm
fritz:
Conrad Dobler:

I wouldn't let the put options out 10 months on the 2.50 and 5 worry me too much, the 20 and 25s are trading at $8 and $11.50.  The cash flow is enough to cover current debt.

 
Over 2 billion/year on the preferred dividends.. If you add bond debt, they have no room for error. 
 

First you said they couldn't cover their nut, now you say they have no room for error.  Sounds like your tune is changing.


 
The opinion on the street among analyists covering MS is positive and I don't doubt they can read balance sheet as well as you and I can. You can’t say “never” these days, but I wouldn’t worry about MS going under. I know you’re unfailingly negative, but if you think MS is going belly-up, why are you there?<?: prefix = o ns = "urn:schemas-microsoft-com:office:office" />

 

The real question, as I see, it for someone considering MS is whether or not you want to be in a wirehouse, period, and whether or not your production is big enough for you to feel secure in a setting where management has made it clear they want to weed out the bottom rung of producers.
Feb 21, 2009 10:17 pm
Conrad Dobler:
fritz:
Conrad Dobler:

I wouldn't let the put options out 10 months on the 2.50 and 5 worry me too much, the 20 and 25s are trading at $8 and $11.50.  The cash flow is enough to cover current debt.

 
Over 2 billion/year on the preferred dividends.. If you add bond debt, they have no room for error. 
 

First you said they couldn't cover their nut, now you say they have no room for error.  Sounds like your tune is changing.


 
The opinion on the street among analyists covering MS is positive and I don't doubt they can read balance sheet as well as you and I can. You can’t say “never” these days, but I wouldn’t worry about MS going under. I know you’re unfailingly negative, but if you think MS is going belly-up, why are you there?<?: prefix = o ns = "urn:schemas-microsoft-com:office:office" />

 

The real question, as I see, it for someone considering MS is whether or not you want to be in a wirehouse, period, and whether or not your production is big enough for you to feel secure in a setting where management has made it clear they want to weed out the bottom rung of producers.
 
I said at the "current estimate" they can not pay the interest on debt.  That is around 2.50/share.  The range is 1.50 to 5.00..so obviously lots can happen.  I do not know what they make, if the market goes to 5000 DOW they will not make the 1.50 then they are in deep trouble.  Institutional report out there saying they need to raise 10 billion in the next 6 months to survive, so not everyone on board.  Short interest has gone from 12 million to 60 million share the past 4 months..Preferred yielding 16%, not exactly blue chip.
Feb 21, 2009 10:49 pm
fritz:
Conrad Dobler:
fritz:
Conrad Dobler:

I wouldn't let the put options out 10 months on the 2.50 and 5 worry me too much, the 20 and 25s are trading at $8 and $11.50.  The cash flow is enough to cover current debt.

 
Over 2 billion/year on the preferred dividends.. If you add bond debt, they have no room for error. 
 

First you said they couldn't cover their nut, now you say they have no room for error.  Sounds like your tune is changing.


 
The opinion on the street among analyists covering MS is positive and I don't doubt they can read balance sheet as well as you and I can. You can’t say “never” these days, but I wouldn’t worry about MS going under. I know you’re unfailingly negative, but if you think MS is going belly-up, why are you there?<?: prefix = o ns = "urn:schemas-microsoft-com:office:office" />

 

The real question, as I see, it for someone considering MS is whether or not you want to be in a wirehouse, period, and whether or not your production is big enough for you to feel secure in a setting where management has made it clear they want to weed out the bottom rung of producers.
 
I said at the "current estimate" they can not pay the interest on debt.  That is around 2.50/share.  The range is 1.50 to 5.00..so obviously lots can happen.  I do not know what they make, if the market goes to 5000 DOW they will not make the 1.50 then they are in deep trouble.  Institutional report out there saying they need to raise 10 billion in the next 6 months to survive, so not everyone on board.  Short interest has gone from 12 million to 60 million share the past 4 months..Preferred yielding 16%, not exactly blue chip.
 
Your numbers seem pretty fast and loose there, fritz.  What Pfd is yielding 16%? "If the market goes to 5000" sure is a hole big enough to drive truck through, and you're cherry-picking your numbers here, as you proved with the earnings number you selected. There's no shortage of short talk for any financial, but just remember, if MS were to go belly-up there would be no major retail brokerage fim left. Doubtful, highly doubtful.
 
I just think the real question for anyone considering MS is the same basic quesion for all of them, is your production such that you'll feel loved there.
 
If you're so concerned about MS failing, are you leaving?
Feb 21, 2009 11:00 pm

The Morgan Stanley preferreds are trading with a 12% handle.  Not exactly the apocalypse, but it's still more than twice what a utility is moving for.  Merrill's are in the mid-twenties, but Goldman Sachs' are in the 8's.

The entire biz is looking like a game of last man standing.  Hopefully MS is being very, very careful about what liabilities Citi is going to be allowed to push on SB's balance sheets before handing them off.  That's what Ken Lewis would say, if he weren't busy burying BAC.

Feb 22, 2009 8:47 am

this is a deadly game of ring around the rosy

NO ONE knows who will be left standing and what they will look like

Im convinced ken lewis, Obama socialist nation and WFC want FA's pay cut in half



I will give you this, the little piss ant regional wanna-be firms that were for wanna-be FA's back in the day (like a year ago) have REALLY come out on top by just being "stock brokers". no banks, no witch doctor.

they will be much bigger players

Feb 22, 2009 12:48 pm

so DDO, do you think that we will basically have 1 or two major wirehouses and then the regionals will become super regionals, and eventually the next wave wirehouses, once they start consolidating down the road?  another question is why the regionals pay so much less to recruit brokers?