Gordon Reid
President at GoodReid Investment Counsel
Member since: Oct '07 · 3986 Opinions
Rating Card
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| 4.94 | 370 30.03% | 304 24.68% | 177 14.37% | 237 19.24% | 144 11.69% | ||
| 1 Month | 5 | 12 3.99% | 114 37.87% | 92 30.56% | 81 26.91% | 2 0.66% | |
| 6 Months | 5 | 60 20.76% | 93 32.18% | 53 18.34% | 63 21.80% | 20 6.92% | |
| 12 Months | 5 | 108 40.00% | 51 18.89% | 17 6.30% | 55 20.37% | 39 14.44% | |
| 2 Years | 5 | 115 48.52% | 35 14.77% | 10 4.22% | 26 10.97% | 51 21.52% | |
| 5 Years | 4.72 | 75 55.56% | 11 8.15% | 5 3.70% | 12 8.89% | 32 23.70% |
Stock Opinions by Gordon Reid
Yes. The Fed is always late; that's not a fault, it's the result of the process. Only the history books will tell us whether they've been too late. Too late means that they don't act until there's an event that they could have prevented if they'd acted earlier.
He can't see any indications showing that the US economy is in the path of harm. But these things can happen fairly quickly. There's no question that the labour markets are weakening, but "weakening" is a lot different from "weak". Fed Chair Powell has been very fond of saying that they're "data dependent". They have to wait until they see something before they act, can't just act on an idea.
It's a serious issue, they have to be measured, and they're doing that.
He expects 25 bps. Could easily do 50, but that might send the wrong message. If the market senses that the Fed is lowing rates because they're fearful of a weak economy, it will react very poorly. The Fed doesn't want to upset the markets, they want to be benign as they relate to the market.
It's not a very well hidden fact that this is just the start. He fully expects that before this cycle is finished, we'll see at least 100 bps drop in rates (even if that moves into 2026).
It'll be interesting to see how the markets do react to this afternoon's press conference. It's not the 25 bps that markets will react to. He's waiting to see if the tone is dovish or hawkish, how many dissents on the board there are, and how many board members would have actually preferred 50 bps. He'll be watching how the market grapples with the message from the written side (decision itself, dissents, dot plots) and from the nuances (how Powell answers questions).
It's all become highly politicized. Well known that President Trump wants to see rates fall, and he's populating the Fed with "his choices". This isn't new. We can go back to the times of Nixon and Ford to see examples of the many presidents who have pressured the Fed to move in a certain way, and who would appoint people to do their bidding for them. It hasn't always worked out so well.
He's in favour of the Fed remaining as independent as possible. But he also understands the reality of the politics surrounding the Federal Reserve.
Growth rates are impressive, with expectations for mid-teens EPS growth. Well over 500M monthly active users (400M outside NA, which is interesting). A social platform, which have taken over the world. Big competition, but a lucrative area. Reasonable multiple.
No strong opinion against taking a position. However, wonders how wide their standalone moat is. He'd prefer something like META, which has Instagram as part of a much bigger organization.
It's made a large bet on a correction in the market, with a cash hoard of $300-350B. So far they've been wrong. This afternoon's announcement won't help that if interest rates go lower. It's the biggest buyer of treasury bills in the world.
He's not in favour of trying to time the market. Hard to speak poorly of this name, as it's done so well over many decades. He remains pretty well fully invested in the market and rides the ups and downs.
In terms of quality, hard to argue against JPM -- best of breed. GS is tops on the investment banking side. If you're looking at valuation and opportunity, Citi would be a very good choice.
In the middle you have money-centre banks like WFC. BAC is also mid-tier. It's not as inexpensive as Citi, and doesn't have quite the pedigree of JPM, but positioned well to do very good things on earnings with a steepening of the yield curve.
He's overweight the banks, and has been for quite some time in anticipation of what's coming this afternoon from the Fed. The whole idea of investing is to get ahead of the money flow and not chase it.
Likes the company, but has never owned the stock. It's always been screened out because of valuation. Trading today at 53x PE on this year's earnings. Great business model, and the street recognizes that.
You have to look at these companies in terms of what can go wrong. If you go into a sustained, negative economic period, there's going to be a lot of hurt on a company like this.
