If you look at the performance of JPMorgan Chase Stocks $JPM in the past year, you'll notice that it has been moving sideways. It is around 8% down from all time high. Is it time to buy JPMorgan Chase?
What makes JPMorgan Chase a great bank? It is well diversified. It is currently the largest investment bank in the world, the largest retail bank in the US and the second largest custodian bank in the World after Bank of New York Mellon $BK . Competitors such as Morgan Stanley $MS and Goldman Sachs $GS focus on investment banking while Wells Fargo $WFC , Bank of America $BAC and Citigroup $C focus on retail banking. You may think that this is bad. They should either sell to only the rich or to only the poor. Companies such as Apple $AAPL and BMW $BMW.DE sell to only the rich while Walmart $WMT sells to only the poor. How was JPMorgan Chase able to sell to both? Through branding. The Chase brand is associated with retail banking. This is the part where they sell to the poor. While the JPMorgan brand is selling to the rich. For example, the JPMorgan Palladium Credit Card is considered to be the most difficult to get. It is on invitation only if you are a customer of JPMorgan Private Banking(you need to have assets worth over $25 million for that).
Why is the stock price moving sideways? It has nothing to do with the company itself. It is mostly because of a recession fear. When there is a recession, bank stocks are always hit the most. They can't lend that much money and also people trade less. The second reason is the interest rate. The interest rate going down can be a bad thing for banks. Last year, I was telling you that it was time to buy bank stocks because of rising interest rates. Is it time to sell this year? Actually JPMorgan Chase is diversified and even with falling interest rates, they can make money. They are currently the number one issuer of credit cards in the US and this business has been booming with the low interest rates.
I won't invest in JPMorgan Chase any time soon. It is because I already have 12% of my portfolio in it. I see other opportunities elsewhere. If there is a recession, then I'll have the opportunity to buy more. Why don't I sell? I'll be an idiot to sell stocks which I bought in 2016 and wait fo a recession. What if it comes in 2030? That's not how investing works. If I had to choose only two companies and invest for the rest of my life, I would have chosen JPMorgan Chase and Apple. But right now, I am an entrepreneurial investor and I have the possibility of making more than two investments. Now if you are someone who has never invested in JPMorgan Chase or who has never invested in any bank stock, I will highly recommend JPMorgan Chase. At the current price, it is a real discount.
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