VIDEO: Preparing for a Visit From Santa Claus

In today’s Portfolio Video, Chris Versace gets us ready for what is expected to be a quiet week for the stock market. However, as we kick things off, with the Volatility Index below 15, Chris explains why there is no room to be complacent. He reminds us that the Portfolio may need to do some prudent trimming of one or two positions should a Santa Claus rally emerge, and where we may put that capital to work.

We discuss fresh developments that support our recent price target increases for Morgan Stanley (MS) and Bank of America (BAC) . And while we don’t want to get too far ahead of ourselves as we wrap up 2025, Chris shares the dates for CES 2026 and why it will be a likely catalyst for multiple Portfolio holdings.

Transcript

CHRIS VERSACE: Hey, everybody. Chris Versace here, December 22. A short trading week, and we only have a handful of days until we close out 2025. And 2026, as you can imagine, right around the corner. Now, if you read Friday's roundup, then you know we do have a quiet set of coming days ahead of us. Not a lot of economic data. Very little.

Actually, no earnings reports this week. We'll take that as a win. We could see more pop up next week. But we also have to be on watch for any, let's just say, unexpected earnings pronouncements, good or bad. And of course, if we see them, we will connect them back to the portfolio.

Let's remember too that just given the way the holidays fall, it's going to be about two weeks of very low trading volume, especially in the back half of this week, given when Christmas falls, and the same next week, given when we have New Year's Day. As we think about that, the volatility index, the VIX, back below 15.

Now, not a lot happening, so not exactly a surprise. But-- but this is the thing-- when it falls below 15, the risk is always that the market becomes a little-- let's just call it complacent. So even though it's going to be a quiet set of days, and yeah, we will take a little time off at the end of each week, given just again, how the holidays fall, we are still going to have our hands on the wheel.

So if anything unexpected happens, anything market-moving, rest assured that we will be there to break it down, share our thoughts with you. And if we need to do anything with the portfolio, rest assured, we will do that. As you've seen, we're not ones who are poised to fall in love with our positions. We'll continue to follow the data, whatever that may mean.

Now, what will we be doing in the next couple of days? Well, we've already told you that we do have two positions-- American Express, Bank of America-- that are kind of bumping up against potential 4 and 1/2% position sizes each. If we do see a Santa Claus rally emerge, if we do see the market melt up, we might have to do some prudent and very profitable portfolio management.

So please keep your eyes out for that. I know I will be watching it. And if we have to do so, rest assured, as I just mentioned, being disciplined investors, we will. I will share because I know we'll get some questions. Anything on our shopping list? Anything we really want to keep our eyes on? Two easy ones to think about just because they are among the smaller sizes in the portfolio.

Obviously, Broadcom, which is our newest position. And of course, Welltower. We did pick up some more Welltower shares. But we do want to continue, if we can, at a good price, continue to increase the portfolio's exposure to this, given the two things that we like about this. One, obviously the silver tsunami tailwind. Two, senior housing pain point.

And of course, we do like the REIT structure, which we think that as we move through 2026, we'll likely to see folks kind of re-embrace them and the dividends that they tend to kick off. So continue to watch that. I will also share that we will be working on our December monthly roundup. I know it's only the 22nd, but we are going to put a little extra work into this one more so than usual because it is the end of the year.

We'll be talking about, what we saw in 2025, things we expect, look forward to in 2026. And I know that we did some of that in last week's stocks and markets podcast. You also heard from [? Lewis, ?] [? Yanis, ?] Sarge, Rev Shark, Helene, a little bit of Jason Meshnik. But we'll be going a couple steps further than we talked about in last week's podcast.

And as we just start to think about what's ahead, just a couple of thoughts here. One, over the weekend, there was some interesting chatter about the IPO market in the first half of 2026. Apparently, Morgan Stanley is being called out as a potential lead in the SpaceX IPO. We're also seeing that AI chip company, Cerebras, could be targeting a second quarter IPO.

Now, that just builds on some of the other higher profile deals that folks are looking for in the first half of '26 and, obviously, the back half of 2026 as well. So that keeps us, of course, very bullish and positive on our shares of Morgan Stanley, Bank of America. Yes, we did just raise our price targets for them last week. But let's remember that there's more than just the IPO market that drives investment banking.

You may have realized this, maybe you didn't, but 2025 was a near record in terms of the number of M&A deals. In particular, 70 deals were worth more than 10 billion each, with 22 two of those high, high, high deals in the current quarter alone. Now, as we look forward to 2026, yeah, lower interest rates and relaxed antitrust oversight. Odds are we're going to see more M&A happen.

So as you can imagine, that back-to-back positives for investment banking activity, on the one hand, you could say, boy, that really reaffirms our recent price target increases for Morgan Stanley, Bank of America. And I would say, you're right. But it also suggests that we're going to continue to focus on that activity because there could be, let's just say, another revision or two higher, depending on what we see in those end markets in 2026 for Morgan Stanley and Bank of America shares.

Now, I also know that we are, as I mentioned, ever so close to the year-end holidays. And I know it's going to be extremely busy for folks. But let's not lose fact that-- or excuse me, let me back up. Let's not lose focus on the fact that when the holidays are over, we are going to hit the ground running. Now, you're probably thinking, oh, he's talking about the December quarter earnings season. Yeah, that will be coming before too long.

But what I'm really talking about is CES 2026, formerly known as the Consumer Electronics Show. This is just a plethora of announcements as it relates to tech, everything from devices to new services. So we, of course, pay very close attention to them, given what the implications are for the portfolio, other companies we're looking at, but also the overall end markets that we have exposure to because of the holdings that we have in the portfolio.

Now, why do I say we're going to hit the ground running? Well, CES 2026 is from January 6 through the 9th. That means the first full week of trading in 2026 is when we're going to have this. So it's going to be extremely busy. We will be having keynotes from Caterpillar, Aura, AMD, Lenovo. No doubt AI is going to be a part of the conversation.

And as we've seen in the past, so too will the number of new connected devices-- smartphones, AI PCs, IoT, and other devices. And when we break it all down, we'll be thinking about what all that means for digital infrastructure and the network, tying it back to the portfolio, whether that's Arista Networks, whether that's Marvell, Broadcom, or some of the others that we have in the portfolio.

Now let's get a little bit back to today. Coming up, we're going to have office hours from 12:00 PM to 1:00 PM in the forum. And as I promised in the weekly roundup on Friday, we're going to have a fresh batch of portfolio signals. In that, we'll be including some things on AI adoption, YouTube overtaking Comcast and spectrum on a combined basis, and fresh indications that consumers are still feeling the pinch in their wallets. Stay tuned. We've got a lot coming your way.

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At the time of publication, TheStreet Pro Portfolio was long MS and BAC.