The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Stephen Gandel

NEW YORK, July 16 (Reuters Breakingviews) - Morgan Stanley MS.N is going out of fashion. The deal consigliere and money manager commanded a 50% valuation premium to Goldman Sachs GS.N three years ago and a smaller one to JPMorgan JPM.N. The gap has narrowed considerably against its arch-rival, and it now trades at a discount, based on its multiple of book value, to the mega-bank led by Jamie Dimon. Tastes change on Wall Street, but there’s no reason to chase passing fads.

Second-quarter earnings allowed banks to strut their investment banking stuff this week. Goldman’s bottom line grew 22% from a year earlier, helped by a surge in fees from dispensing guidance to CEOs on M&A. Along with Bank of America BAC.N, which also reported earnings on Wednesday, it benefited from better stocks and bonds trading performance.

By contrast, Morgan Stanley looked frumpy in these sexier areas of the industry. Despite nearly keeping pace with Goldman on net profit, advisory revenue slipped 14% from the second quarter of 2024 and its debt underwriting division slumped even more. In some sense, part of it is by design.

Boss Ted Pick took over an institution 18 months ago that had beefed up in the business of helping rich folks grow and preserve their fortunes and narrowed its investment banking focus. The most recent results attest to the strategy. Morgan Stanley’s wealth management revenue increased 14%, outpacing Goldman and other peers, and the amount of assets it oversees swelled to $8.2 trillion, keeping the bank on track to reach its $10 trillion goal by 2030.

There’s little reason for Pick, who unlike his predecessor ascended through the ranks of bankers and traders, to get swept up in the latest trends. Morgan Stanley has developed a healthy balance, with steadier profit generated from helping well-heeled clients invest and organize their estates. The siren song of investment banking bonanzas inevitably gets louder on occasion and drowns out the many cautionary tales of expensive over-hiring and unexpected losses. Consistency, however, almost never goes out of style.

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CONTEXT NEWS

Morgan Stanley said on July 16 that it generated $3.5 billion in earnings in the second quarter of 2025, up 15% from the same period a year earlier. Rival Goldman Sachs reported a 22% increase in net income, powered by a stronger performance in its Wall Street trading and investment banking businesses.

(Editing by Jeffrey Goldfarb; Production by Pranav Kiran)

((For previous columns by the author, Reuters customers can click on GANDEL/ stephen.gandel@thomsonreuters.com))