JPM - JPMorgan Chase & Co.: Here We Go Again

2024-04-13 01:54:23 ET

Summary

• JPMorgan Chase's stock price reaction to its good earnings report was due to focus on the earnings outlook rather than current results.
• CEO Jamie Dimon expressed doubts about the economy. The economic outlook can affect bad debt estimates (for example) and hence earnings.
• Economics has a weak foundation with the assumption of "man is a rational human being" combined with a refusal to include the results of research in psychology.
• This so-called bull market has a relatively narrow breadth, with many sectors correcting. That eliminates a lot of downside risk.

JPMorgan Chase & Co. ( JPM ) had a stock price reaction that one would not normally expect for such a good earnings report. Then again, Mr. Market has been in a sour mood lately as less and less stocks move upward in what is typically the final leg of a bull market. Many sectors are already correcting as a result even though this is supposedly still a bull market. JPMorgan is likely the Cadillac of the banking industry. But even a premium idea like this is not immune to environmental worries and one-time events that have the market dithering over the future of the bank. Nonetheless, I like to consider buying good management on any pullback. Today represented a solid pullback opportunity to get in on one of the best managements of the industry.

Economics

Jamie Dimon, CEO, has long had his doubts about the economy and for good reason. Economics has a very weak underlying foundational assumption that man is a rational human being. The general failure of economics to allow psychology findings to alter this foundational assumption has led to a lot of disappointments for the soft science that has wanted to be predictable....

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