JPMorgan Chase: Too Big To Fail Financial Utilities

About: JPMorgan Chase & Co. (JPM), Includes: BAC, BCS, BK, C, CS, DB, GS, MS, STT, UBS, WFC
by: Praveen Chawla
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Praveen Chawla
Long only, momentum, Growth

Buffett in a CNBC interview last February said that given long-term bonds, JPM stock is cheap at <2X tangible book value and should be trading at more than 3X.

Since the interview, 10-year interest rates have gone down from 2.67% to 1.8%, a decline of 32% and JPM stock has gone up over 30%.

Buffett has famously said that interest rates are like gravity on stock valuation. Given low interest rates for the foreseeable future, the big banks will continue to generate great results.

Background & Investment Thesis

Barron's Andrew Bary points out that In a CNBC interview in February, Buffett suggested that JPMorgan Chase (NYSE:JPM) ought to trade for at least three times tangible book