JPMorgan: A Tale Of Jamie Dimon And (Not) Making Money

Mar.15.13 | About: JPMorgan Chase (JPM)

As the whole "London Whale" thing was blowing up in the media, I had taken a position in JPMorgan Chase (NYSE:JPM) figuring that the whole thing was blown out of proportion and that the stock was heavily oversold.

Had I held on to my shares, I would've realized a nice profit indeed, here is a chart showing the relative performance of JPM vs. SPY, if one was lucky enough to get into JPM at the bottom:

JPM Total Return Price Chart
(Click to enlarge)

JPM Total Return Price data by YCharts

However as I wrote in a previous article, I had formed a personal opinion that went directly against the opinion of Warren Buffett, President Obama and various other notable people singing high praise for JPM CEO Jamie Dimon. I had changed my mind on Dimon and since my original thesis was in part based on the assumption of quality management, I had sold my shares.

What happened:

I tend to continue actively following stocks I have owned in the past even after selling them, as I want to see how they end up playing out and whether the decision to sell was the correct one given the information available at the time or whether I was wrong and had missed something.

Two seemingly opposing views, yet both of them ended up being right, but only one of them ended up making money for the person who held it.

I had recently gotten a reminder to take a fresh look at JPM when I discovered the following gem of a clip, Mr. Dimon's by now infamous "That's Why I'm Richer Than You" moment. If anything, it reassured me that this person wasn't the banking knight on a white horse the media was making him out to be.

And sure enough, from Marketwatch comes the following:

"WASHINGTON (MarketWatch) - A Senate subcommittee report on Thursday charged J.P. Morgan Chase & Co. with ignoring its own limits on risk taking, manipulating risk models to avoid detection and ignoring warnings from traders as the bank's CEO, Jamie Dimon, intentionally withheld investment bank profit and loss data from federal regulators.

The report does have one example showing that Dimon intentionally sought to cut off regulators from critical daily profit and loss trading data at a time that it could have started to provide damaging information about trading losses at the firm.


Both views, the one that the JPM trading losses are overblown and the one that Jamie Dimon is a deeply flawed character that cannot truly be considered to be "quality management" ended up being correct.

These events were a good reminder for me to continue trying to avoid short-term trading (as tempting as it can often be) and focus on buying quality companies I can understand that have a management team I can trust.

I wonder if Berkshire Hathaway's (NYSE:BRK.A) (NYSE:BRK.B) Mr. Buffett who has famously proclaimed that Jamie Dimon would be the best pick for Treasury Secretary still holds the same opinion?

Disclosure: I am long BRK.B. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.