Jamie Dimon Shareholder Letter - Awesome read

[LongHaul]

A huge number of CEO letters I read are a total disgrace and make me want to vomit on the PR person that wrote it.

 

Jamie Dimon's was just fantastic this year.  It was very real and a great reminder of a lot of good things about the world and America.  Has lots of other insights for everyone.

 

http://files.shareholder.com/downloads/ONE/3084643199x0x742267/e2efaf60-814f-430e-869e-6889ba3ec0ec/2013AR_Chairman-CEO_letter.pdf

 

BTW - when I was visiting a Chase branch my 3 year old son asked if they Chase you.  I said "only if you don't pay them back!"

 

 

[Mephistopheles]

Thanks for posting.

 

There was a thread on here some time ago with a Google spreadsheet listing all the good shareholder/investor letters. Can anyone share the link to that spreadsheet if they have it?

 

Thanks

[siddharth18]

Thanks for posting.

 

There was a thread on here some time ago with a Google spreadsheet listing all the good shareholder/investor letters. Can anyone share the link to that spreadsheet if they have it?

 

Thanks

 

There you go - https://docs.google.com/spreadsheet/ccc?key=0Aisl_3YDx6vMdGZ2QnloNDJUNmlvS2lVcXFkdDA2RFE&usp=drive_web#gid=0

[Liberty]

There's some discussion of the letter here:

 

http://brooklyninvestor.blogspot.ca/2014/04/jpm-annual-report-2013.html

[Mephistopheles]

Thanks for posting.

 

There was a thread on here some time ago with a Google spreadsheet listing all the good shareholder/investor letters. Can anyone share the link to that spreadsheet if they have it?

 

Thanks

 

There you go - https://docs.google.com/spreadsheet/ccc?key=0Aisl_3YDx6vMdGZ2QnloNDJUNmlvS2lVcXFkdDA2RFE&usp=drive_web#gid=0

 

Thanks Siddharth!

[yadayada]

can someone explain like im an idiot why it is good for banks if the fed stops keeping the interest rates from going up?

[Uccmal]

can someone explain like im an idiot why it is good for banks if the fed stops keeping the interest rates from going up?

 

The banks get better interest rate spreads when rates are somewhat higher than they are now. 

 

Instead of borrowing at 1% and lending at 3%, they can borrow at 2% and loan at 4.3%.  The 0.3% over a trillion dollars becomes significant.  At a certain point rates go too high and people stop borrowing as much.  Dimon is talking about hitting a sweet spot where soreads and volumes are both good. 

 

Historically banks didn't do as well in rising rate environments but most of the bigger banks now hedge off possible interest rate risk.  It also has to do with the speed of a rise. 

 

That good?

[LC]

can someone explain like im an idiot why it is good for banks if the fed stops keeping the interest rates from going up?

 

The banks get better interest rate spreads when rates are somewhat higher than they are now. 

 

Instead of borrowing at 1% and lending at 3%, they can borrow at 2% and loan at 4.3%.  The 0.3% over a trillion dollars becomes significant.  At a certain point rates go too high and people stop borrowing as much.  Dimon is talking about hitting a sweet spot where soreads and volumes are both good. 

 

Historically banks didn't do as well in rising rate environments but most of the bigger banks now hedge off possible interest rate risk.  It also has to do with the speed of a rise. 

 

That good?

 

My fear is that increased rates will reduce the overall demand for loans. I read somewhere that banks actually do better in a lower interest rate environment because of the higher volume of new/refinancing loans, which also come with transaction fees, etc

[txlaw]

can someone explain like im an idiot why it is good for banks if the fed stops keeping the interest rates from going up?

 

The banks get better interest rate spreads when rates are somewhat higher than they are now. 

 

Instead of borrowing at 1% and lending at 3%, they can borrow at 2% and loan at 4.3%.  The 0.3% over a trillion dollars becomes significant.  At a certain point rates go too high and people stop borrowing as much.  Dimon is talking about hitting a sweet spot where soreads and volumes are both good. 

 

Historically banks didn't do as well in rising rate environments but most of the bigger banks now hedge off possible interest rate risk.  It also has to do with the speed of a rise. 

 

That good?

 

Yeah, that's how I would explain it. 

 

At the zero bound, NIMs are highly compressed.  In fact, I believe we are still at historically low NIMs in the US -- see http://research.stlouisfed.org/fred2/series/USNIM.  When rates go up, NIMs should go up. 

 

Also, higher (but not too high) interest rates tend to mean a better economy and, therefore, higher volume of biz.  That is, higher interest rates are a sign of a better economy, and since we were (are?) in a global balance sheet recession, where the private sector was actually deleveraging, we will have quite a bit of demand for debt financing going forward, not just in the US but across the world.  Debt- (as opposed to equity-) financed growth isn't going away and only increases proportionately with global GDP growth.

 

Mortgage banking has slowed in the US for good reason -- everyone who could refinance or take out low interest rates did so as soon as they could to take advantage of the historically low interest rates.  And now we will see mortgage banking normalize, I suppose.

 

Anyone disagree with this simple assessment?

[Valuebo]

There's some discussion of the letter here:

 

http://brooklyninvestor.blogspot.ca/2014/04/jpm-annual-report-2013.html

 

Interesting. I'm wondering how conservative those numbers are. Even if they are bullish you still stand to make a fortune through warrants/leaps unless we see a severe market downturn.

[yadayada]

can someone explain like im an idiot why it is good for banks if the fed stops keeping the interest rates from going up?

 

The banks get better interest rate spreads when rates are somewhat higher than they are now. 

 

Instead of borrowing at 1% and lending at 3%, they can borrow at 2% and loan at 4.3%.  The 0.3% over a trillion dollars becomes significant.  At a certain point rates go too high and people stop borrowing as much.  Dimon is talking about hitting a sweet spot where soreads and volumes are both good. 

 

Historically banks didn't do as well in rising rate environments but most of the bigger banks now hedge off possible interest rate risk.  It also has to do with the speed of a rise. 

 

That good?

yeah thx. So basicly only when rates go up, do banks stand ac hance to profit from this.

[randomep]

A huge number of CEO letters I read are a total disgrace and make me want to vomit on the PR person that wrote it.

 

Jamie Dimon's was just fantastic this year.  It was very real and a great reminder of a lot of good things about the world and America.  Has lots of other insights for everyone.

 

http://files.shareholder.com/downloads/ONE/3084643199x0x742267/e2efaf60-814f-430e-869e-6889ba3ec0ec/2013AR_Chairman-CEO_letter.pdf

 

BTW - when I was visiting a Chase branch my 3 year old son asked if they Chase you.  I said "only if you don't pay them back!"

 

Hi, I had a cursory look at the report and can't see what is special about it. Why is it such a good report?

thanks

[Liberty]

Hi, I had a cursory look at the report and can't see what is special about it. Why is it such a good report?

thanks

 

I also stopped reading halfway through. Maybe the good part is the second half?

 

It wasn't bad, I just didn't feel he was saying much other than "JPM is a good business, it'll continue to be a good business, because we'll keep going with our long term strategy, but we'll also adapt, because we're good, etc, etc".

[jay21]

Hi, I had a cursory look at the report and can't see what is special about it. Why is it such a good report?

thanks

 

I also stopped reading halfway through. Maybe the good part is the second half?

 

It wasn't bad, I just didn't feel he was saying much other than "JPM is a good business, it'll continue to be a good business, because we'll keep going with our long term strategy, but we'll also adapt, because we're good, etc, etc".

 

I can see how the well read and well informed might think it was nothing special, but I thought it did a great job giving a high level overview of the banking industry today in terms of regulation, QE, global growth, etc.

[Liberty]

I can see how the well read and well informed might think it was nothing special, but I thought it did a great job giving a high level overview of the banking industry today in terms of regulation, QE, global growth, etc.

 

I don't want to sound too harsh about it, it was more candid and had more details than a lot of shareholder letters, and I'm sure that by reading all his previous letters you can cumulatively learn a lot about the industry and how to think about it.

 

But maybe I was expecting too much from this one because many people were saying how good it was. That's the curse of high expectations...

[vinod1]

Hi, I had a cursory look at the report and can't see what is special about it. Why is it such a good report?

thanks

 

I also stopped reading halfway through. Maybe the good part is the second half?

 

It wasn't bad, I just didn't feel he was saying much other than "JPM is a good business, it'll continue to be a good business, because we'll keep going with our long term strategy, but we'll also adapt, because we're good, etc, etc".

 

Yes. Read the second half. Slowly.

 

One of the few people who have a direct pulse on the economy due to the nature of the company. Here you have a guy who is giving his opinion, unvarnished, without hedging every sentence.

 

Vinod

 

 

[Liberty]

Yes. Read the second half. Slowly.

 

One of the few people who have a direct pulse on the economy due to the nature of the company. Here you have a guy who is giving his opinion, unvarnished, without hedging every sentence.

 

Vinod

 

I will, thanks.

 

Update 45 minutes later: Ok, done. Part IV was probably the most interesting part to me, so it was worth it. I had already seen the highlights at B.I., but it was nice reading the whole thing.