JPM - JP Morgan

[Rasputin]

Yes, 3.414 B avg weighted diluted shares outstanding in 2018 vs 3.274 B shares outstanding as of Jan 31 2019.

[John Hjorth]

JPM 2018 Annual Report & Mr. Dimon's Letter to Shareholders got released today.

[vinod1]

By far the best annual letter of any company that I read so far this year. A few years ago, Buffett's letter used to be the gold standard, now it is Dimon's.

 

Vinod

[LongTermView]

By far the best annual letter of any company that I read so far this year. A few years ago, Buffett's letter used to be the gold standard, now it is Dimon's.

 

QFT

[Viking]

By far the best annual letter of any company that I read so far this year. A few years ago, Buffett's letter used to be the gold standard, now it is Dimon's.

 

Vinod

 

I am not sure what to think about Dimon’s letter this year. I love the company and have an enormous respect for Dimon and what he has accomlished. But i find his letter, now 50 pages long, is repetitive (year over year) and often covers topics that have very little to do with JPM. Clearly Dimon feels he has a responsibility to ‘help the US’; i just question if this is the best way if he is serious about effecting change (versus just climbing on his soap box every year).

 

Personally, i would much prefer he shortens the letter and each year does a deep dive in one of JPM business lines to help shareholders understand the business and how to properly value it. Or something more like that (specific to banking or JPM and insights to help investors understand the industry and/or value the company).

 

PS: John, thanks for letting everyone know the letter had been posted :-)

[wescobrk]

Unfortunately, the reality is the CEO of a company this large is as much politician as CEO. The regulator forces them into this spectrum. There is a long in the letter that sounds like someone running for office.

I don't disagree they aren't important social issues, but Dimon never would have written about this stuff if the market cap was $10 billion or even $50 billion.

This man is such a target among the Maxine Waters, AOC, etc.

[Cardboard]

"This man is such a target among the Maxine Waters, AOC, etc."

 

You mean enemies of the nation at par with Bin Laden?

 

Cardboard

[Guest Schwab711]

"This man is such a target among the Maxine Waters, AOC, etc."

 

You mean enemies of the nation at par with Bin Laden?

 

Cardboard

 

Chill out...

[sleepydragon]

Unfortunately, the reality is the CEO of a company this large is as much politician as CEO. The regulator forces them into this spectrum. There is a long in the letter that sounds like someone running for office.

I don't disagree they aren't important social issues, but Dimon never would have written about this stuff if the market cap was $10 billion or even $50 billion.

This man is such a target among the Maxine Waters, AOC, etc.

 

... and Elizabeth Warren calling for Sloan to go to jail..

[Parsad]

"This man is such a target among the Maxine Waters, AOC, etc."

 

You mean enemies of the nation at par with Bin Laden?

 

Cardboard

 

Cardboard, if this type of crap comment shows up on another thread outside of Politics, you will be gone...think twice before posting going forward!  Goes for others as well!  Cheers!

[Gregmal]

While I think Carboards remark was satirical in nature, I also think if any a place in the investing forums, it is here, in relation to the big banks where politics is very, VERY, relevant.

 

I remember watching the London whale testimony just thinking how stupid these politicians were and how little they knew, and especially how it was all just for show. And then I remember saying out loud, "holy fuck, Jamie Dimon you are the man!" because of how efficiently he handled this situation. Both gracefully enlightening the congress folks, while also preverbially bitch slapping them without them even noticing. I remember seconds later going long the stock, at around $37, solely based off of how inspiring Dimon was. This was a man amongst boys, in a league of his own; a natural born leader. He did it again in February 2016 with his $25M JPM purchase at ~$51, which effectively marked the bottom of that drawdown, and he continues to be the gold standard.

 

But I don't think anyone should forget, these guys do all have targets on their heads. Bigger targets than Zuckerberg and Bezos.

[Parsad]

While I think Carboards remark was satirical in nature, I also think if any a place in the investing forums, it is here, in relation to the big banks where politics is very, VERY, relevant.

 

I remember watching the London whale testimony just thinking how stupid these politicians were and how little they knew, and especially how it was all just for show. And then I remember saying out loud, "holy fuck, Jamie Dimon you are the man!" because of how efficiently he handled this situation. Both gracefully enlightening the congress folks, while also preverbially bitch slapping them without them even noticing. I remember seconds later going long the stock, at around $37, solely based off of how inspiring Dimon was. This was a man amongst boys, in a league of his own; a natural born leader. He did it again in February 2016 with his $25M JPM purchase at ~$51, which effectively marked the bottom of that drawdown, and he continues to be the gold standard.

 

But I don't think anyone should forget, these guys do all have targets on their heads. Bigger targets than Zuckerberg and Bezos.

 

Satirical or not...the reason there is a Politics board is to keep this stuff there.  Cheers!

[Spekulatius]

I felt the shareholder letter is very good, but the last 10 pages  indeed seem to be more about his desire to get involved in politics rather than being CEO of a bank.

 

Also, what is his gripe with mortgages? The big banks have become fairly uncompetitive with mortgages, but from a customer perspective, the mortgage process has become much simpler due to what seams to be a standardized platform (Ellie Mae?). Just had my refinance done in 2 weeks (very low cost; almost no cost refinance), my quickest ever - all online, except signing of the final docs with a notary.

[sleepydragon]

I felt the shareholder letter is very good, but the last 10 pages  indeed seem to be more about his desire to get involved in politics rather than being CEO of a bank.

 

Also, what is his gripe with mortgages? The big banks have become fairly uncompetitive with mortgages, but from a customer perspective, the mortgage process has become much simpler due to what seams to be a standardized platform (Ellie Mae?). Just had my refinance done in 2 weeks (very low cost; almost no cost refinance), my quickest ever - all online, except signing of the final docs with a notary.

 

I found smaller/local banks/mortgage brokers gave better rates than big banks for conventional loans.

But for jumbo loans, it’s big banks that have the best rates. (Funny jumbo loan has lower interest rate than conventional loans). JPM has higher rate than WFC and BAC, based on my experience of a couple years ago. This also has to do how much they can sell their mortgage to the market after issuance. And WFC’s are still regarded as the best quality.

 

[vinod1]

By far the best annual letter of any company that I read so far this year. A few years ago, Buffett's letter used to be the gold standard, now it is Dimon's.

 

Vinod

 

I am not sure what to think about Dimon’s letter this year. I love the company and have an enormous respect for Dimon and what he has accomlished. But i find his letter, now 50 pages long, is repetitive (year over year) and often covers topics that have very little to do with JPM. Clearly Dimon feels he has a responsibility to ‘help the US’; i just question if this is the best way if he is serious about effecting change (versus just climbing on his soap box every year).

 

Personally, i would much prefer he shortens the letter and each year does a deep dive in one of JPM business lines to help shareholders understand the business and how to properly value it. Or something more like that (specific to banking or JPM and insights to help investors understand the industry and/or value the company).

 

PS: John, thanks for letting everyone know the letter had been posted :-)

 

He addresses a lot of things that are going to determine the profitability of the company over the long term. Very few CEO's address them. A case in point is about the tax cuts. He points out that most of that is going to be competed away.

 

I see many people plug in lower tax rates into (pre-tax income) x (1 - tax rate) and vola they see an immediate increase in earnings which they extrapolate from there into future years.

 

This is very much the case for some companies, like Visa or Mastercard for example. But for banks, we need to adjust for this. Only one other CEO of a big bank talked about it among all the banks that I follow.

 

Gems like this are spread throughout the letter. Stuff which is important but difficult to assess from outside so the perspective of the CEO is going to be useful.

 

Vinod

 

 

[Liberty]

http://brooklyninvestor.blogspot.com/2019/04/jpm-2018-annual-report-website-etc.html

[John Hjorth]

... I remember watching the London whale testimony just thinking how stupid these politicians were and how little they knew, and especially how it was all just for show. And then I remember saying out loud, "holy fuck, Jamie Dimon you are the man!" because of how efficiently he handled this situation. Both gracefully enlightening the congress folks, while also preverbially bitch slapping them without them even noticing. I remember seconds later going long the stock, at around $37, solely based off of how inspiring Dimon was. This was a man amongst boys, in a league of his own; a natural born leader. He did it again in February 2016 with his $25M JPM purchase at ~$51, which effectively marked the bottom of that drawdown, and he continues to be the gold standard. ...

 

Greg,

 

Please tell us more about it, when you do your bold moves - when you actually do them.

[Gregmal]

... I remember watching the London whale testimony just thinking how stupid these politicians were and how little they knew, and especially how it was all just for show. And then I remember saying out loud, "holy fuck, Jamie Dimon you are the man!" because of how efficiently he handled this situation. Both gracefully enlightening the congress folks, while also preverbially bitch slapping them without them even noticing. I remember seconds later going long the stock, at around $37, solely based off of how inspiring Dimon was. This was a man amongst boys, in a league of his own; a natural born leader. He did it again in February 2016 with his $25M JPM purchase at ~$51, which effectively marked the bottom of that drawdown, and he continues to be the gold standard. ...

 

Greg,

 

Please tell us more about it, when you do your bold moves - when you actually do them.

 

I have in the past.

 

Many work, a few here and there dont(like BHC earnings trade and RSYS merger arb where I posted the idea and was about the only one in the world who didn't make money because I read it wrong). My most recent ones have been actionable, especially gene therapy/CRSPR related ideas and the buy anything under the sun call in mid/late December, but frankly after the preposterous reaction from many here on the MDXG trade I decided it better to tone back the ideas if it was just going to be met with scorn from under appreciative underperformers(likely due to jealousy).

 

My point here is that JPM is the best of the banks and Jamie Dimon is basically God so dont overcomplicate things when it comes to owning JPM.

[sleepydragon]

... I remember watching the London whale testimony just thinking how stupid these politicians were and how little they knew, and especially how it was all just for show. And then I remember saying out loud, "holy fuck, Jamie Dimon you are the man!" because of how efficiently he handled this situation. Both gracefully enlightening the congress folks, while also preverbially bitch slapping them without them even noticing. I remember seconds later going long the stock, at around $37, solely based off of how inspiring Dimon was. This was a man amongst boys, in a league of his own; a natural born leader. He did it again in February 2016 with his $25M JPM purchase at ~$51, which effectively marked the bottom of that drawdown, and he continues to be the gold standard. ...

 

Greg,

 

Please tell us more about it, when you do your bold moves - when you actually do them.

 

I have in the past.

 

Many work, a few here and there dont(like BHC earnings trade and RSYS merger arb where I posted the idea and was about the only one in the world who didn't make money because I read it wrong). My most recent ones have been actionable, especially gene therapy/CRSPR related ideas and the buy anything under the sun call in mid/late December, but frankly after the preposterous reaction from many here on the MDXG trade I decided it better to tone back the ideas if it was just going to be met with scorn from under appreciative underperformers(likely due to jealousy).

 

My point here is that JPM is the best of the banks and Jamie Dimon is basically God so dont overcomplicate things when it comes to owning JPM.

 

A few years back my wife let me manage her 401k(converted to IRA) . Within a year I lost 35% of it. My wife was shouting and kicking and crying. Later I bought JPM at 50ish, at 100%, and later BRKB. Made all the money back and up like 50% from the original balance. Her comment was “just up so little? After all these years?”

 

[undervalued]

... I remember watching the London whale testimony just thinking how stupid these politicians were and how little they knew, and especially how it was all just for show. And then I remember saying out loud, "holy fuck, Jamie Dimon you are the man!" because of how efficiently he handled this situation. Both gracefully enlightening the congress folks, while also preverbially bitch slapping them without them even noticing. I remember seconds later going long the stock, at around $37, solely based off of how inspiring Dimon was. This was a man amongst boys, in a league of his own; a natural born leader. He did it again in February 2016 with his $25M JPM purchase at ~$51, which effectively marked the bottom of that drawdown, and he continues to be the gold standard. ...

 

Greg,

 

Please tell us more about it, when you do your bold moves - when you actually do them.

 

I have in the past.

 

Many work, a few here and there dont(like BHC earnings trade and RSYS merger arb where I posted the idea and was about the only one in the world who didn't make money because I read it wrong). My most recent ones have been actionable, especially gene therapy/CRSPR related ideas and the buy anything under the sun call in mid/late December, but frankly after the preposterous reaction from many here on the MDXG trade I decided it better to tone back the ideas if it was just going to be met with scorn from under appreciative underperformers(likely due to jealousy).

 

My point here is that JPM is the best of the banks and Jamie Dimon is basically God so dont overcomplicate things when it comes to owning JPM.

 

A few years back my wife let me manage her 401k(converted to IRA) . Within a year I lost 35% of it. My wife was shouting and kicking and crying. Later I bought JPM at 50ish, at 100%, and later BRKB. Made all the money back and up like 50% from the original balance. Her comment was “just up so little? After all these years?”

 

lol

[Spekulatius]

... I remember watching the London whale testimony just thinking how stupid these politicians were and how little they knew, and especially how it was all just for show. And then I remember saying out loud, "holy fuck, Jamie Dimon you are the man!" because of how efficiently he handled this situation. Both gracefully enlightening the congress folks, while also preverbially bitch slapping them without them even noticing. I remember seconds later going long the stock, at around $37, solely based off of how inspiring Dimon was. This was a man amongst boys, in a league of his own; a natural born leader. He did it again in February 2016 with his $25M JPM purchase at ~$51, which effectively marked the bottom of that drawdown, and he continues to be the gold standard. ...

 

Greg,

 

Please tell us more about it, when you do your bold moves - when you actually do them.

 

I have in the past.

 

Many work, a few here and there dont(like BHC earnings trade and RSYS merger arb where I posted the idea and was about the only one in the world who didn't make money because I read it wrong). My most recent ones have been actionable, especially gene therapy/CRSPR related ideas and the buy anything under the sun call in mid/late December, but frankly after the preposterous reaction from many here on the MDXG trade I decided it better to tone back the ideas if it was just going to be met with scorn from under appreciative underperformers(likely due to jealousy).

 

My point here is that JPM is the best of the banks and Jamie Dimon is basically God so dont overcomplicate things when it comes to owning JPM.

 

A few years back my wife let me manage her 401k(converted to IRA) . Within a year I lost 35% of it. My wife was shouting and kicking and crying. Later I bought JPM at 50ish, at 100%, and later BRKB. Made all the money back and up like 50% from the original balance. Her comment was “just up so little? After all these years?”

 

Losing proposition. If you bet on JPM had gone wrong, you may have looked at a divorce. What did you get for winning  ;D?

[John Hjorth]

By far the best annual letter of any company that I read so far this year. A few years ago, Buffett's letter used to be the gold standard, now it is Dimon's.

 

Vinod

 

I am not sure what to think about Dimon’s letter this year. I love the company and have an enormous respect for Dimon and what he has accomlished. But i find his letter, now 50 pages long, is repetitive (year over year) and often covers topics that have very little to do with JPM. Clearly Dimon feels he has a responsibility to ‘help the US’; i just question if this is the best way if he is serious about effecting change (versus just climbing on his soap box every year).

 

Personally, i would much prefer he shortens the letter and each year does a deep dive in one of JPM business lines to help shareholders understand the business and how to properly value it. Or something more like that (specific to banking or JPM and insights to help investors understand the industry and/or value the company).

 

PS: John, thanks for letting everyone know the letter had been posted :-)

 

He addresses a lot of things that are going to determine the profitability of the company over the long term. Very few CEO's address them. A case in point is about the tax cuts. He points out that most of that is going to be competed away.

 

I see many people plug in lower tax rates into (pre-tax income) x (1 - tax rate) and vola they see an immediate increase in earnings which they extrapolate from there into future years.

 

This is very much the case for some companies, like Visa or Mastercard for example. But for banks, we need to adjust for this. Only one other CEO of a big bank talked about it among all the banks that I follow.

 

Gems like this are spread throughout the letter. Stuff which is important but difficult to assess from outside so the perspective of the CEO is going to be useful.

 

Vinod

 

Thank you Vinod & Viking,

 

To me, this exchange of opinions is one of the most interesting - for a long time - here on CoBF .. because I actually understand - and have personal sympathy & understanding for both your individual & personal takes on the JPM Shareholder Letter by Mr. Dimon. [ : - ) ]

 

[Spekulatius]

As for the lower tax rate, it would be interesting to see studies, if this earnings boost is at least partly competed away. Given how important taxation is, I am surprised there haven’t been many studies on this. So far, I haven’t seen much evidence of lower pretax profit margins. there are also some natural experiment available across state lines where different income tax rate can cause distortions that might be analyzable.. 

[Viking]

As for the lower tax rate, it would be interesting to see studies, if this earnings boost is at least partly competed away. Given how important taxation is, I am surprised there haven’t been many studies on this. So far, I haven’t seen much evidence of lower pretax profit margins. there are also some natural experiment available across state lines where different income tax rate can cause distortions that might be analyzable..

 

Spekulatius, my read is Dimon has created this narrative around tax reform (it will get competed away over time) to create a more positive spin. He also talks about using tax reform also to invest more (they are expanding into new cities).

 

He is a very smart dude and the last thing he wants is for the Democrats to get elected in 2020 and for his tax rate to go up. The more he can control/influence the narrative the better. The optics problem the big banks have is profits have spiked in 2018 and they are at record levels.

 

I do believe Dimon makes good points. I also think bank profits will be permanently higher as a result of tax reform (i am not convinced the benefit will be competed away over time :-)

[Guest cherzeca]

As for the lower tax rate, it would be interesting to see studies, if this earnings boost is at least partly competed away. Given how important taxation is, I am surprised there haven’t been many studies on this. So far, I haven’t seen much evidence of lower pretax profit margins. there are also some natural experiment available across state lines where different income tax rate can cause distortions that might be analyzable..

 

competed away. meaning what? all C corps have same lowered tax rate (and LLCs, and LLCs in "bad" industries like law and accounting having managing members earning less than $315K income filing jointly).  so are you saying some c corps will do exactly what in this competing away exercise?