Jamie Dimon's Letter to Shareholders, Annual Report 2025

[Blake Hampton]

Jamie Dimon's Letter to Shareholders, Annual Report 2025

Some of my highlights:

 

"The challenges we all face are significant."

 

"Now, because of the war in Iran, we additionally face the potential for significant ongoing oil and commodity price shocks, along with the reshaping of global supply chains, which may lead to stickier inflation and ultimately higher interest rates than markets currently expect."

 

"And we also continue to buy back enough stock so as not to increase total excess capital, though we have a number of options on how to deploy our capital and are clear-eyed that many asset prices, including bank stocks, are fully valued."

 

"One of the huge risks for a bank has always been a “run on the bank,” which occurs when people think that their uninsured deposits are at risk. The FDIC only covers insured deposits, and the run risk is driven by uninsured deposits, particularly nonoperating uninsured deposits. In recent bank failures, regulators have had to invoke the systemic risk exception (SRE) to protect uninsured deposits at the point of failure. That is a problem — no one should want this as an emergency mechanism. It creates moral hazard, and the process to invoke the SRE is chaotic and involves multiple agencies, including approval by the Treasury Secretary in consultation with the President. Bank runs can happen quickly, and relying on that type of action to avoid contagion is simply not a good idea."

 

"It is also good to remember that the United States remains the world’s best investment destination, particularly when things are going badly."

 

"Liquidity itself is a complex concept and can also change with sentiment. Often when people talk about liquidity, they are talking about the ability to readily buy or sell in the marketplace, e.g., when spreads are high and volumes are low, this would be considered low liquidity. Sometimes people are referring to the money supply. Money can be created by the central bank when it buys securities or by banks when they expand their balance sheets. In both cases, they create deposits (more liquid assets) in the short run. But all investors, from individuals to companies to major asset managers and banks, have their own liquidity needs and requirements, usually driven by their policy or regulatory policy, working capital requirements, collateral needs and sentiment (for example, the desire to be more conservative). When asset prices drop and all of these other factors change, the “need for liquidity” can change dramatically, too. When people get scared, they generally sell risky assets to buy safe ones, e.g., essentially T-bills or deposits at safe banks. And when they sell risky assets, they usually start with their most liquid positions."

 

"High and increasing government debt will eventually have to be dealt with — the right way would be to deal with it now before it becomes a problem; the wrong way would be to let it become a crisis, which, in my opinion, is probably the likely outcome. Importantly, almost 60% of government spending is for entitlements and is not discretionary. This makes the job that much harder."

 

"Rapidly decreasing asset prices can sometimes create a self-reinforcing loop. It’s always good to remember that prices are set by the marginal buyers and sellers — which, on the average day, is only a small fraction of asset owners. And it’s also good to remember that foreigners own almost $30 trillion of U.S. equities and bonds."

 

"In the great scheme of things, private credit probably does not present a systemic risk."

 

"Some political leaders have said that there is a “rupture” between America and the Western world —that the red lines have been crossed and there is no return to the prior system. I completely disagree. There is no practical replacement to the prior system. It has not ruptured, but it needs reform. The middle-sized nations do not have real alternatives in terms of building a unified military or a unified economy that can compete effectively with the United States and China. If these middle nations did, the result would look a lot like what Europe is today: dysfunctional. The only practical alternative is to fix the current situation."

 

"I do not want to contemplate the opposite. Without American leadership, there would be a huge vacuum. If not us, who? We are the only country that has the capability to do it. Fragmented relationships with and among our extensive allies could lead to an “every nation for themselves” mentality. America would become more isolated, the U.S. dollar would no longer be the world’s reserve currency and autocratic nations would rejoice. Need I say more?"

 

"While we should acknowledge America’s flaws, they should not be used to pull apart our country. We need to believe in ourselves and get back to work, not tear each other down. Many of the blind ideologies being bandied about run counter to our fundamental principles. Ideologues often adhere to rigid beliefs and, when extreme, seek to impose those beliefs on others; in radical forms of fanaticism, there is no room for individual differences. While we should listen to all people and all viewpoints, we should not allow ourselves to become weaponized."

 

"I believe we have gotten a little too soft."

[Malmqky]

Good letter, thanks for sharing. Dimon's letters are my favorite along with Buffett, ML , Nick Sleep, and Bezos. Actually worth readinng compared to idk, say Bruce B.