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A price-earnings multiple is supposed to measure both the earnings capacity of a company and the market's confidence in that earning capacity growing. As a relative confidence measure it's a pretty good thing.

Robert Shiller of Yale made his name measuring “real” P/Es (based on a 10-year moving average of earnings) and noting how booms bust when the ratio gets too high. Market bears are quick to tell you that the current number, 23.07, is unreasonably high, in historic terms, and we need to watch out.

Of course, such numbers vary by industry. A growing tech company like Google (NASDAQ:GOOG) may look cheap at a P/E north of 21, while the New York Times' (NYSE:NYT) 12.76 may look expensive. (Even with its recent troubles, the P/E of News Corp. (NASDAQ:NWS) is still at 13.45.)

Banks are supposed to have relatively low P/Es, because it's not supposed to be an exciting business. They have grown harder to measure as big banks have been combined with brokerages, which invest for their own account, and can either bring big returns or negative ones, depending on conditions.

If you're looking to invest in these guys you don't have many options. There's Citigroup (NYSE:C), Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), and JPMorgan Chase (NYSE:JPM). (Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS) are only nominally banks, having been turned into them kicking-and-screaming during the financial crisis.)

All four of the biggest banks have a large retail presence, credit cards, mortgages, do business loans, and have brokerage arms of some size. So which is cheapest? The answer may surprise you, because it's JPMorganChase.

JPM's current P/E of 8.5, with a nice 2.5% yield, is much cheaper than Citigroup's 11.47, Wells Fargo's 11.09 or Bank of America's infinity (it's lost money the last two years). Yet it's JPM's Jaime Dimon who is on the covers of magazines, and Dimon who has been informally crowned “King of Wall Street,” the guy who knows, the spokesman, the don.

One reason is it got loaded with a lot of bad mortgages, which are still on the books. But so did everyone else. The company's continuing stock buybacks haven't helped.

Neal Razi says JPM is a good buy at current levels based on his technical analysis, which he also calls “the strongest bank in the world.” It is? With an 8.5 P/E in the face of $3 billion in buybacks?

All the current doom-and-gloom regarding Europe's debts and America's debts are obviously weighing on the stock, and its supposed strength may cause them to weigh more heavily, since it's assumed they will be among the “strong hands” to be given weak assets when push comes to shove.

The relative conservatism of JPM's lending practices, even after TARP, also has some predicting another crash. But if the big banks crash, how can industrial companies and retail companies and tech companies maintain any kind of P/E?

At the end of the day, I can find no fundamental reason why JPM should be such a cheap stock, and the technicals look good too. If it just got to Citigroup's P/E that would be a substantial gain for buyers. If it traded near Schwab's P/E of 26 you would have doubled your money.

But that might be too much to ask since, as I've said before Charlie, not Jaime, is the real King of Wall Street.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: JPMorgan: The Cheapest Big Bank You Can Own