JP Morgan and Jamie Dimon: A Question of Trust
Posted by Larry Doyle on May 18, 2012 7:33 AM |
Do you engage in business with people you don’t trust?
Sometimes you may have no choice, but in doing so you likely keep your guard up or exact a higher risk premium.
For those with a choice, keeping one’s distance from those you do not fully trust is typically the preferred path. For those without a choice, a lack of trust is often offset with a lot of hope and prayers. Hope always remains a lousy hedge against a lack of trust. We see this at play currently on both sides of the pond.
Investors clearly have very little trust in the European banking system at large and banks in peripheral EU countries specifically. Not only investors lack trust. The reality of bank runs in Greece should not be quickly dismissed by investors and consumers globally.
While hard dollars and cents may be viewed as the currency upon which financial institutions are measured, the real currency of these companies is trust. Despite what our central bankers and political elites may promote, the barometer of trust in our large banks continues to decline. On this side of the Atlantic, we can look no further than JP Morgan and Jamie Dimon.
In one short week, this bank with its fortress balance sheet has suffered a 17% decline in valuation. News stories out this morning reflect a bank and a CEO which clearly took their eye off the ball in a HUGE way.
Investors are supposed to blindly trust Dimon and team? In this day and age? Yet that seems to be the belief as referenced in a Wall Street Journal report, Peering Over JP Morgan’s Hedges:
. . . investors are still being asked to take a lot on trust.
JP Morgan may be in bed with the Federal Reserve, the U.S. Treasury, and every financial regulatory organization known to mankind. Every analyst may promote JPM stock as exceptional value and screamingly cheap. However, post-2008 this little virtue known as trust trades at a much higher premium. The current price of JP Morgan stock is a clear reflection of that lack of trust. The daily trading volume across equity exchanges is also a reflection of a similar lack of trust.
To both address the question of trust and inject a little Friday morning humor into a situation where little exists, can we ever forget the individual who violated a trust of a young, innocent scholar?
Does anybody see any similarities between these gentlemen?
Hmmmm…..both are clearly smooth, suave, and debonair.
What about trust?
Any JP Morgan shareholders in the crowd?
Down 17% in a week and a whole host of unknowns swirling about the stock is no laughing matter.
I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.