Growthies That Disappoint Make You Shirtless

If earnings expectations for iconic growth stocks contract below a 20 multiplier, Microsoft and its ilk wobble and sell down. Tesla, which trades some 70 million shares daily shows no late foot. Where tick the Polaroids and Xeroxes of yester-years?

Over 100-point damage is spreading among growth stocks. It embraces Microsoft, Home Depot, Oracle, United Health, Goldman Sachs and Tesla. This is a who’s who of growthies. Sadly, any stock selling at 30 to 40 times earnings does get cut in half on numbers disappointments. 

I just received in the mail the Goldman Sachs annual report and 2026 Proxy Statement. Normally, I toss such communications into my waste basket. Goldie’s annual stretches 250 pages long while its proxy statement runs over 100 pages. Print size is diminutive here.  I needed a magnifying glass for much of my reading. If this proxy report was presented in normal 10-point type size it would run at least 150 pages. 

Sadly, there is nothing written of the war President Trump wages or its impact on the financial world in terms of valuation and earnings. Is a recession around the corner? What does $111 oil do to inflation, corporate and individual earnings and buying power? Goldman’s return on equity now 15%. 

I’m surprised to see prime growth stocks like Microsoft, Qualcomm and Salesforce testing their lows of the past couple of years. There is no Nifty Fifty left to speak of. No safe stocks to embrace unless you believe $100 plus oil is here to stay as a base price and not a peak soon to plunge back $30 a barrel. Exxon Mobil doesn’t turn me on. 

My list of fading growthies grows longer, not shorter. Aside from the long decline in Microsoft, stocks like Meta, Berkshire Hathaway, Johnson & Johnson and Walmart approach new low ground. Still buoyant remains Coca-Cola, good for the past 50 years or so. 

The market isn’t so approachable on a forward price-earnings ratio of 20 times earnings. Where is the great paper at 15 times earnings? It doesn’t parade as yet. A handful of energy stocks like Exxon Mobil still trade at their highs. 

Goldman’s “Fellow Shareholder” page compares and summarizes results of 2019 with 2025. What caught my eye was that last year’s return on equity was 15% which is not exactly a world beater in a financial services business. At least, it’s a big improvement over 2019 when ROE was just 10%. Book value stood at $357.60. This is an important valuation stat for a financial services business. 

Rarely does a financial operator ever sell at more than 20 times earnings. In a good operative setting, the multiplier for banks is 1.5 times book value. For shaky banks with loan loss issues that may need additional equity financing, you could sell at no more than book value. 

J.P. Morgan sells at 15 times earnings and yields 2%. On a bad day in the market JPM can shed 3%, 8 or 9 points. Volatility for GS is comparable. Right now, I’d worry about JPM’s major earnings sector, asset management. It has to be under pressure. Simply put, iffy financial markets can hurt both operators. 

I never domiciled my assets at GS because they charge a big premium for carrying individual debit balances. With Treasury bond yields approaching 5%, I’m holding more of such paper rather than betting on theTesla type property. 

Stocks that sell near the 1,000-dollar range, like Costco and Eli Lilly, I regard as curiosities rather than playable paper. Corporate lawyers control proxy statements which make them categorically suspect, nearly unreadable. Toss ‘em aside.