Why I Stopped Buying JPMorgan Chase STOCK?
$JPM is currently the third largest holding in my portfolio after $AAPL and $FB . I told you several times that if I had to choose only two companies to invest in, without any doubt, it would have been JPMorgan Chase and Apple. So why I didn't buy more?
First, let's understand why I believe that $JPM is the best bank in the world. It is currently the largest retail bank in the US(sixth in the world after 4 Chinese banks and Mitsubishi), the largest investment bank in the world ahead of $GS and $MS and the second largest custodian banks in the world after $BK . So this bank has been able to be the market leader in multiple fronts. Although, right now $WFC still has more branches in the US, Chase is growing at a fast rate. In international banking, $C and $HBC $HSBA.L are still the leaders but $JPM is becoming a threat to their business especially in Asia. So, the bank can still grow. $BAC and $WFC on the other hand, are mostly limited to the US market. I often say that you have to either sell to the rich or to the poor and not both. For example, $AAPL sells to the rich while $WMT sells to the poor. $JPM has been able to sell to both using the brand name JPMorgan for the rich and Chase for the poor.
Now, let's look at how the company has actually been doing since 2005, the year Jamie Dimon became CEO. The stock gained 285% outperforming the $SPX500 . If you bought the stock at the peak of the financial crisis, you would have made over 800% profits. I know that there are many stocks for example $AMZN or $NFLX which had far better gains even if we include the $JPM dividends. But, for a bank of that size to grow by such an amount in just 14 years is amazing(let's not forget the whole financial system nearly collapsed in 2008). Jamie Dimon is one of the greatest businessmen in the world today as he was able to make great acquisitions during the financial crisis and also able to further grow the bank. That's why both Warren Buffett and Jeff Bezos claims that Jamie Dimon's annual letters are must-reads. The company is keeping innovating and recently launched JPM Coin which is supposed to work like $XRP and facilitate their daily $6 Trillions transactions. The bank has also been very conservative in all the deals they make. They don't really jump on every IPO opportunity like $GS and $MS . They only do deals where they are sure of a successful outcome, for example the merger of $BAYN.DE with Monsanto and the IPO of $BYND . These tradition goes back to John Pierpont Morgan, who is considered to be the greatest banker in history and named the Emperor of Wall Street. The title of King of Wall Street goes to Jamie Dimon.
Now, let's answer the question: Why I stopped buying? Everything I told you seems to indicate that the bank is the best at everything it does. The reason is that I was seeking diversification. I invested in $WFC $MS and $GS since I believed in the future of the banking industry. As Mark Cuban once said, "Diversification is for idiots" When you have a great company as JPMorgan Chase with a great management, I don't think that investing in other banks minimizes the risk. Of course, I am now correcting my mistake and trimming my positions in the other banks. Eventually I look forward to increasing my positions in $JPM , I'm just waiting for a more attractive price.
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