JPMorgan Chase Stock is a Bond
๐ฆ I got a comment on my last video analysis of JPMorgan Chase $JPM that it is like investing in a bond. I've been holding JPMorgan Chase Stocks since 2016 along with Apple $AAPL . But unlike Apple, I am still buying JPM. ๐๐จ ๐๐ฉ ๐ง๐๐๐ก๐ก๐ฎ ๐๐จ ๐จ๐๐๐ ๐๐จ ๐ ๐๐ค๐ฃ๐? ๐ฟ๐ค๐๐จ ๐๐ฉ ๐ง๐๐๐ก๐ก๐ฎ ๐ฅ๐ง๐ค๐ซ๐๐๐ ๐๐ค๐ฃ๐จ๐๐จ๐ฉ๐๐ฃ๐ฉ ๐ฅ๐๐ฎ๐ข๐๐ฃ๐ฉ ๐ก๐๐ ๐ ๐ ๐๐ค๐ฃ๐?
๐ข Warren Buffett likes to look at stocks as if they are bonds since it is easy to find the intrinsic value (or present value) of a bond. The earnings yield of JPM today is 6.5%, which is better than treasury yields (eg. TLT $TLT at 1.5%) and even junk bonds ( $JNK at 5.0%). The earnings yield of the S&P 500 $SPX500 is 2.5%. JPM is one of the rare stocks which we can call safe still ๐ฌ๐๐ฉ๐ ๐๐ฃ ๐๐๐ง๐ฃ๐๐ฃ๐๐จ ๐ฎ๐๐๐ก๐ ๐๐๐๐๐๐ง ๐ฉ๐๐๐ฃ ๐๐ช๐ฃ๐ ๐๐ค๐ฃ๐๐จ, which would have been normal if we were not in a stock market bubble.
๐บ๐ธ๐ The ๐ฌ๐ค๐ง๐ ๐๐ฃ๐ ๐๐ฃ๐ซ๐๐ง๐ค๐ฃ๐ข๐๐ฃ๐ฉ ๐๐ค๐ง ๐๐๐ฃ๐ ๐จ ๐๐จ ๐๐๐ with zero interest rates, quantitative easing and the Dodd-Frank Act of 2011. But JPMorgan Chase has shown resilience. Its ROE is the highest among the big banks and is back to pre pandemic levels. It is because they are expanding their business both domestically and internationally. By mid-2021 Chase will be in all 48 lower states and may soon overtake Wells Fargo as the bank with the most branches in the US. JPMorgan is already the largest investment bank in the world. JPMorgan Chase also has a great management with Jamie Dimon considered to be the greatest CEO in the world.
๐ฐ JPMorgan Chase set aside over $30 billion as reserve for credit losses for last quarter. But only $2 billion was used. They want to ๐ฅ๐ก๐๐ฎ ๐๐ฉ ๐จ๐๐๐ as uncertainties still loom with this pandemic and recession.
๐ธ JPMorgan Chase is safe and can provide consistent payment, something we will usually see with a bond. Calling JPM stock a bond can be dangerous in the short-term as it is more correlated with stocks. But if we're looking at the long-term, then the correlation becomes irrelevant. This is a stock ๐ฉ๐ค ๐๐ช๐ฎ ๐๐ฃ ๐๐ฃ๐ฎ ๐๐ค๐ง๐ง๐๐๐ฉ๐๐ค๐ฃ ๐๐ฃ๐ ๐๐ค๐ก๐ ๐๐ค๐ง๐๐ซ๐๐ง.
Watch the full video on YouTube:
https://www.youtube.com/watch?v=ftykUel3Pi8
Hereโs the full analysis of JPMorgan Chase:
https://ishfaaqpeerally.teachable.com/courses/662813/lectures/29692769
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