Raphael Stevens

A Norwegian Gateway cruise ship leaves from the Manhattan port during sunset in New York City, United States on April 10, 2022.
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Check out the companies making the biggest moves midday:
Norwegian Cruise Line — Shares sunk more 4.83% after the cruise ship operator reported in a filing with the Securities and Exchange Commission that it will report a net loss for the fourth quarter and full year of 2022, as well as the first quarter of 2023.

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Charles Schwab — The bank stock lost 6.22% after Bank of America double-downgraded shares to an underperform rating, saying that clients will continue moving cash into alternatives such as money market funds.
Vornado Realty Trust — Shares of the real estate investment trust shed 3.9% after cutting its quarterly dividend to 37.5 cents per share from 53 cents. Vornado Realty, which owns commercial properties in cities such as New York and San Francisco, cited the current state of the economy and capital markets, as well as Vornado’s redacted projected 2023 taxable income, primarily due to higher interest exposure.
Roblox — Roblox shares shed 6.57% following a downgrade to an underweight rating by analysts at Morgan Stanley. The bank said the video game stock’s upside is limited following a strong December metrics report.
Philip Morris — The Marlboro parent gained 1.94% after Jefferies called the stock “recession resistant.”
ServiceNow — Shares gained 2.94% after Bank of America named the software stock a top pick. The firm noted its “best-in-class growth.”

Tesla — Shares of the electric-vehicle maker slipped 1.25% in midday trading. Piper Sandler reiterated its outperform rating on the stock, saying investors should be “proactively” buying shares. A day earlier, CEO Elon Musk’s fraud trial began over tweets he wrote in 2018 about considering taking Tesla private, which had caused the stock to rally.
Alcoa — Shares of the aluminum company fell 7.35% on Thursday after the company announced its fourth-quarter results. Alcoa’s adjusted fourth quarter loss was 70 cents per share, narrower than the 81 cent loss expected, according to StreetAccount. However, the company’s adjusted EBITDA — a profit metric that includes fewer expenses than net income — missed estimates. Alcoa said it expects total alumina shipments to decline year over year in 2023.
Discover Financial Services — The online bank fell nearly 2% midday, but later closed down just 0.43%, after hiking provisions for credit losses and projecting higher net charge off rates this year, a signal that customers are falling behind. Discover beat expectations for both earnings per share and revenue for the quarter.
CureVac — Shares rallied 9.18% after the biopharmaceutical company was upgraded by UBS to buy from neutral. The Wall Street firm said Phase 1 results for an influenza treatment saw a “major inflection point.”
Ford — The automaker’s stock dropped 1.85% after its price target was cut by Evercore ISI, which said the automaker could struggle if there is a recession.
Allstate — The stock dropped 5.88%, a day after the insurance company announced preliminary fourth-quarter results that include an estimated adjusted net loss between $335 million and $385 million.
Northern Trust — Shares of the financial institution fell 8.6% after the company reported fourth-quarter net income per diluted common share of 71 cents, compared to $1.91 in the fourth quarter of 2021. Revenue from its trust and investment services came in at $1.04 billion, less than the $1.05 billion expected by StreetAccount.
Comerica — Shares jumped 5.91% after the financial services company topped profit expectations in its latest quarterly report. Comerica reported earnings of $2.58 per share, greater than the $2.55 earnings per share expected by analysts polled by Refinitiv.
— CNBC’s Samantha Subin, Jesse Pound, Alex Harring, Sarah Min and Michael Bloom contributed reporting.

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Overconfidence bias is a behavioral principle that can be used to describe overestimating one’s financial acumen.
Investors may be tricked into thinking they can beat the market or may suffer higher trading costs as a result, for example.
A recent report from the Financial Industry Regulatory Authority suggests many investors have this bias.

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Your investment ego may be costing you big bucks.
“Overconfidence bias” is the behavioral principle of overestimating one’s own abilities, including financial acumen. And while confidence isn’t a bad thing, it can have damaging results — if you don’t have the chops to back it up.

“It should be no surprise that for the average investor, overconfidence can potentially be a pathway to poor portfolio performance,” wrote Omar Aguilar, CEO and chief investment officer at Charles Schwab Asset Management.
For example, this “ego-driven tendency” might trick your brain into thinking it’s possible to consistently beat the stock market with risky bets, Aguilar said. Statistics show it’s tough for the pros, so it’s bound to be hard for the average person, too.
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Beyond adding potentially unnecessary risk to a portfolio, an investor’s overconfidence might introduce higher relative costs associated with the frequent buying and selling of assets, Aguilar said.
A recent report from the Financial Industry Regulatory Authority, or FINRA, shows many investors may have this bias.

Almost 2 in 3 investors, 64%, rate their investment knowledge highly, and 42% are comfortable making investment decisions, according to FINRA. Younger investors, ages 18 to 34, were more likely to be confident than those in older age groups: 35- to 54-year-olds, and those over age 55.
However, investors with more confidence also disproportionately answered more questions incorrectly on a FINRA investing quiz — suggesting that “many younger investors are not simply uninformed, but potentially misinformed,” according to the report.

Investors don’t often get financial feedback

Knowing how confident you should or shouldn’t be is known as “calibration.” People are generally well-calibrated if they get frequent feedback on decisions, letting them know if they were directionally right or wrong, said Dan Egan, vice president of behavioral finance and investing at Betterment.
The problem is that people don’t often get that feedback in financial settings, Egan said.
“It’s very easy to have an impression of, ‘Actually, I know a lot and haven’t been proven wrong,'” Egan said. “And we don’t go looking for it.”
“We tend to protect our egos,” he added. “We want to think well of ourselves.”

Technology and social media have also made it easier for people to develop false impressions of their own knowledge and skill, Egan said. For example, investors can fall prey to “confirmation bias,” whereby they seek out evidence in social media circles that confirms a previously held but potentially false belief.
Of course, technology and the internet have also made it easier than ever to access information — though users must then discern whether that data source is accurate and reliable.
And while younger investors may disproportionately overestimate their knowledge, the extent to which it’s doing them harm is unclear, Egan said. They might not have amassed much money so early in their careers, meaning a mistake may be less costly relative to seniors, who’ve built up a sizable nest egg over their working lives and have more to lose.

When an investment is trendy, ‘start watching yourself’

Overconfidence bias in investing tends to manifest most often with get-rich-quick type investment decisions, Egan said.
“That’s when you need to start watching yourself,” he said.
Take the meme-stock bonanza or the cryptocurrency rush in 2021, for example. Millions of investors created brokerage accounts early in the year largely to capitalize on a runup in prices; if they got in or sold at the wrong time, it could have cost them big bucks.

Similarly, overconfidence may lead rushed investors to accidentally buy the wrong stock, Egan said.
For example, many investors bought the stock of Signal Advance in 2021 following a tweet by Elon Musk, who told followers to “use Signal,” leading the stock to surge by over 400% in a day. However, investors inadvertently bought the wrong stock — the Tesla and SpaceX CEO was referring to the encrypted messaging app Signal, whereas Signal Advance is a small component manufacturer.

How to check your investing ego

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One way to overcome potential overconfidence is to examine past investment decisions and how they worked out, Aguilar said. Analyze how overconfidence may have led to poor outcomes over time and what may have been achieved with a more realistic approach, he said.
Further, investors can use a “pre-mortem” strategy, Aguilar said.
The concept — invented by psychologist Gary Klein and endorsed by advocates such as economist and Nobel laureate Daniel Kahneman — tries to beat overconfidence by imagining potential outcomes from a future perspective. The purpose is to improve a decision rather than have it “autopsied” after the fact, Klein wrote.
Imagine — perhaps one, five, 10 or 20 years from now — that your investment was a success. Think through the reasons for that potential success. Likewise, imagine it was a disaster and think through the reasons why, Aguilar said. The exercise may help people see “potential risks and missteps” they overlooked due to excessive optimism, Aguilar said.
“To be aware of the error, I think, is unquestionably worthwhile,” Kahneman has said of the strategy.

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Morgan Stanley ‘s (MS) multiyear transformation plan has been a success, CEO James Gorman said with pride Thursday — and, as shareholders, we see no reason to disagree. “We’ve steadily de-risked parts of the business that got us in trouble during the [Great Financial Crisis], and we obviously made a major push in building up wealth and asset management, and it worked,” Gorman said in a CNBC interview from the World Economic Forum in Davos, Switzerland. “We’re delighted with where we got to.” The Club is delighted, too, even if the market hasn’t always shared our conviction in the shift Gorman has engineered since taking over the Wall Street bank in 2010. Under Gorman’s leadership, Morgan Stanley has pivoted toward the more stable revenues associated with wealth and asset management, which decreases its reliance on the often volatile investment banking and trading businesses. This strategy attracted us to the stock nearly two years ago, believing that it would boost Morgan Stanley’s valuation over time — because, in general, investors put a premium on steady sales streams. MS 6M mountain Morgan Stanley’s stock performance over the past six months. Morgan Stanley’s strong quarterly results earlier this week validated our ownership yet again. Those fourth-quarter numbers also came on the same morning its longtime Wall Street rival, Goldman Sachs (GS), reported a sizable earnings miss due, in part, to its expansion into consumer banking . While declining to comment Thursday on his competitor, Gorman happily outlined what he views as the benefits of Morgan Stanley’s transformation. “We needed to build a business where, if the world got tough again — which we just saw last year an example of it — we would be just fine. And the way to do that is to build businesses that are stable; it doesn’t matter what the market conditions are,” Gorman said. “Listen, every person who is buying a stock, there’s somebody else selling it. Everybody who is buying a bond is taking money out of cash. … There’s constant movement of money. Our job is to be in the middle.” Acquisitions were a big part of how Morgan Stanley maneuvered its way into the middle of that money flow. The bank took full control of wealth manager Smith Barney a decade ago. More recently, it purchased brokerage E-Trade and investment management firm Eaton Vance . Valued at roughly $20 billion in total, those acquisitions closed in October 2020 and March 2021, respectively. The deals were “aggressive,” Gorman acknowledged. “We were told consistently when we bought Smith Barney then E-Trade, then Eaton Vance, we overpaid on all of them. My response was, ‘You’re right.’ But it doesn’t matter,” Gorman told CNBC. “We now own the business. It doesn’t matter plus or minus a billion dollars. What matters is over a 10-year period what you can do with that business.” We now own the business. It doesn’t matter plus or minus a billion dollars. What matters is over a 10-year period what you can do with that business. Morgan Stanley CEO James Gorman Economic outlook Gorman was also asked about his thoughts on the global economy, inflation and the Federal Reserve. His outlook was relatively optimistic at a time when consensus expectations are for a U.S. recession, albeit a mild one. Gorman said he thinks 2023 will be an improvement compared with 2022, which was filled with slumping stock markets and elevated price pressures that prompted a very aggressive interest rate-hiking campaign from the Federal Reserve. “I think it’ll be better. I really do,” Gorman said. While it’s unclear what the Fed will do with rates in the coming months, Gorman said that one favorable development, at least, is that U.S. inflation has already peaked. Recent government data has supported Gorman’s contention, with price pressures cooling for both consumers and wholesale producers . Another positive is what’s happening economically in China, Gorman said. While the CEO said Beijing’s decision to relax strict Covid controls is important, he put more emphasis on an adoption of growth-oriented economic policies and a thawing of U.S.-China tensions. He pointed to the meeting this week between U.S. Treasury Secretary Janet Yellen and Chinese Vice Premier Liu He as evidence. Elsewhere across banking, JPMorgan (JPM) CEO Jamie Dimon told CNBC earlier Thursday he believes the Fed may need to rise interest rates above its current projections because, he thinks, “there’s a lot of underlying inflation, which won’t go away so quick.” The Club’s take Despite widespread recession fears since last year, the Club has maintained its belief in Morgan Stanley. The transformation plan that Gorman touted throughout Thursday’s interview showed why we not only stayed invested but bulked up our position at lower levels as the stock sold off early last year. As of right now, we’ve got a 2 rating on Morgan Stanley, meaning we’d wait for a pullback before buying more shares. The stock has gained more than 10% already in 2023 — helped in large part by a nearly 6% advance Tuesday as investors cheered the bank’s earnings report. We can certainly afford to be patient while we wait for investment banking revenues to bounce back from a multi-quarter slump. Morgan Stanley shares carry a roughly 3.3% dividend yield, and it bought back $1.7 billion worth of stock in the fourth quarter. The firm appears to be positioned to continue repurchasing stock because in June its board authorized a multiyear, $20 billion buyback program . (Jim Cramer’s Charitable Trust is long MS . See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

James Gorman, Chairman & CEO of Morgan Stanley, speaking on Squawk Box at the WEF in Davos, Switzerland on Jan. 19th, 2023.. 
Adam Galica | CNBC

Morgan Stanley’s (MS) multiyear transformation plan has been a success, CEO James Gorman said with pride Thursday — and, as shareholders, we see no reason to disagree. More

Jamie Dimon, President, CEO & Chairman of JP Morgan Chase, speaking on Squawk Box at the WEF in Davos, Switzerland on Jan. 19th, 2023. 
Adam Galica | CNBC

JPMorgan Chase CEO Jamie Dimon said Thursday that politicians should be serious about the debt ceiling as Congress remains locked in a political fight to increase the U.S. borrowing limit.
“We should never question the creditworthiness of the United States government. That is sacrosanct. It should never happen,” Dimon said Thursday on CNBC’s “Squawk Box” from the World Economic Forum in Davos, Switzerland.

His comments come as Congress remains in a standoff over the debt ceiling, the amount of money the U.S. is authorized to borrow to pay its bills. Treasury Secretary Janet Yellen said last week that a U.S. debt default would “cause irreparable harm to the U.S. economy, the livelihoods of all Americans, and global financial stability.”
Today, Dimon said, “Of course Democrats will blame the Republicans and Republicans will blame the Democrats. I don’t care who blames who. Even questioning it is the wrong thing to do. … That is just a part of the financial structure of the world. This is not something you should be playing games with at all.”
The current ceiling is about $31.4 trillion. Since the cost of government operations exceeds federal tax revenues, the U.S. must raise money by selling Treasury bonds, but can’t do so beyond the mandated debt ceiling.
A U.S. default would send shock waves throughout the U.S. and global economies, including market volatility and frozen federal benefits.
On the broader economy, Dimon said inflation will likely remain stubbornly elevated, forcing the Federal Reserve to raise interest rates higher than 5%.

— CNBC’s Greg Iacurci contributed reporting.
Correction: Treasury Secretary Janet Yellen said last week that a U.S. debt default would “cause irreparable harm to the U.S. economy, the livelihoods of all Americans, and global financial stability.” An earlier version mischaracterized her comments. More