Jamie’s Letter Impresses As Stocks Give Up Gains!

"I am not afraid of an army of lions led by a sheep; I am afraid of an army of sheep led by a lion."

--Alexander the Great

One of the areas people find most fascinating in studying history, or at least I do, is learning about great generals like Ghengis Khan, Alexander the Great, Napolean, Washington, Grant, Patton, MacArthur, Norman Schwartzkopf,and of course, the Mad Doggy (General James Mattis). These figures triumphed on the battlefield and often did so repeatedly, after suffering setbacks. Their strategic brilliance, resiliency, and ability to understand the opposition is worthy of study by anyone who wants to achieve superior results in competitive endeavors. As such, business schools often use war as a comparison to the pursuit of profit because most industries have multiple competitors vying for supremacy. Just like the famous war heroes of the past, the current business landscape has leaders who have a long track record of superior results. In a few special instances, individuals have built tremendous companies multiple times, even after having to start over because of professional obstacles. Napolean was the most famous general known for coming back again and again- just ask the Russians. The current business versions of Napolean are John Malone, and a one Jamie Dimon. Let’s chat a little bit about Mr. Dimon, shall we?

This past week, the CEO of JP Morgan Chase released the annual shareholder letter and report. It was 46 pages in all, and is well worth your time to read because of the companies accomplishments, clarity, vision, and simplicity. Also, I would recommend reading the different CEO letters from the various divisons which make up the 100 billion dollar entity that is Chase. (Consumer and Card Services, Commercial, Corporate and Investment Banking, Fixed Income, Currencies, and Commodities, and Asset Management). Mr. Dimon did not inherit such a monster, not at all. Along with Sanford Weil, they took a little lending company called Commercial Credit and built it into Travelers, and then merged that with Citicorp. Dimon was fired by Weil years later after questioning the travel expenses of Weil’s daughter. He spent a year out of business, and then took the head position of Bank One, fixed it, and then it was bought by JP Morgan, with Mr. Dimon taking the lead spot. At the time, both were considered second tier competitors in the banking space. During the financial crisis, JPM bought both Bear Stearns and Washington Mutual for pennies on the dollar. It has now surpassed all other US banks in terms of market share. Just consider these impressive statistics- 103 billion in revenue, and 24.4 billion of net income for the entire bank. It is the leader in revenues across all banks in the categories of investment banking, wealth management, and consumer banking. Chase invested 10 billion dollars in improving their technology across all divisions. Clearly, Mr. Dimon is focused on organic growth, and shareholders have been rewarded with a stock price which has outperformed the S&P 500 over the last 10 years (here is the letter). It is obvious today that Mr. Dimon was the best leader in the banking space, but this happened over a long period time. It is a good lesson to watch out for fallen performers who take over new positions. Usually, the great ones don’t suddenly lose it, in fact, they are willing to prove their merit over and over again.

In the market this week, the March jobs report came in quite soft at only 103 thousand jobs created, far fewer than the 185k estimate. Coupled with the escalating figures about China tariffs from the White House, led by you know who, and the equity market gave back its gains from earlier in the week. Getting back to Mr. Dimon’s letter, in it he commented on how to fix our broken political situation. It displayed an article written by ex-Democratic Senator and Presidential Candidate George McGovern, where McGovern talked about his experience as a hotel owner after he got out of office. The article made the point that he wished he had private sector experience before he was a public citizen as it made him realize the difficulties of the complex tax regime for businesses. The current leaders of the Democratic party, Mr. Sanders and Mrs. Warren, would be wise if they looked at this letter and took the suggestion to heart. As Mr. Dimon points out, there are 150 million people who work in the US, and the 130 million that work in the private sector help carry the load for those who are in the public sector. Public sector employees should be held in high regard for their contributions to society as well, but Bernie, Elizabeth, ex President Obama, and the current leaders of the Democratic party seem to feel that if you are trying to make a profit, well, you must be doing something wrong. Our country would do well to strongly consider what Mr. Dimon has to say, whether you agree with his viewpoints or not. Next week, we will hear more from Mr. Dimon as his competitors and the sector report their most recent earnings. They will attract the attention of all investors, as they should.

Thank you for reading the blog this week, and if you have any questions about investing, please email me at This email address is being protected from spambots. You need JavaScript enabled to view it.

Yale Bock, Y H & C Investments, its clients, and the family of Yale Bock have positions in the securities mentioned in the blog,  Investing in securities involves risk and the potential loss of ones principal.  Past performance is no guarantee of future results.  All investment decisions should be considered with respect to ones risk tolerance, return objectives, liquidity needs, tax considerations, and one's overall financial situation.  The fact that Yale Bock has earned the right to use the Chartered Financial Analyst in no way means or guarantee performance better than market indexes.