October 2, 2008, 6:22 am

Is this really the graph of a US bank?

by: The Financial Blogger    Category: Investment, Market and Risk,Trading
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Is it possible that the graph you are looking at is one of a bank, a major US bank? Imagine this.. the stock actually hit its 52 week high today, at 50$. So done guessing? It’s not a small bank, it’s actually JP Morgan, one of the biggest banks in the world and from the look of this graph, JP Morgan is doing fairly well in this crazy environment.



Why? There are actually a few reasons behind it. A major part is that the core of JP Morgan’s operations are actually its banking, it is not an investment bank and had little exposure to these very risky investments that are now killing a lot of the bigger banks.

So JP Morgan has a very solid balance sheet and has had opportunities that simply do not exist in normal circumstances. Think of Washington Mutual, one of the largest banks in the nation that in a matter of days and weeks, went to the brink of bankruptcy. While the Fed was trying to find someone to help WM out, there were almost no banks in a position to do so (the only possibility perhaps would have been Citibank but with its stock now so low, they have less capital than they had not long ago).

For this reason, JPM is currently having possibilities to gain a lot of business and will have less competition when things become a lot calmer with rivals such as Washington Mutual out of the picture.

Tonight, the US senate passed the 700$Billion bail-out plan set up by secretary Paulson and it will now go to the house of representatives (that rejected it days ago) and will hopefully go through. “It’s very important for us to pass this piece of legislation so as to stabilize the situation, so that it doesn’t get worse and that our fellow citizens lose wealth and work,” President George W. Bush said. If that happens, we might be able to set a more stable environment in the financial sector as well as the US economy, something banks such as JP Morgan will be in a great position to profit from…!

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Comments

I’d still rather they decline the bill. Although it will help the economy, it also gives those institutions that helped cause it a second chance to repeat what they did.

I’d rather take another 6 months in a down economy to let those companies fail, then bail them out and let them do it again.

Bear in mind that the federal reserve is a private institution, owned by undisclosed banks. To guess at the banks, look at who gets the sweetheart deals and government guarantees when they take over their neighbors. Look at the LTCM, Bear Sterns deals, and all the others – just a few banks get fantastic bargains – the others get trashed. Now guess who owns the Fed (since1913).

The federal reserve is no more a government agency than Federal Express. The pre-picked fed governors are appointed – and give testimony (marketing pitch) to congress, but their results – loss of value in the dollar – are another hidden tax.

Of course JPMorgan survived the depression and keeps on ticking – it will survive this depression profitably also; unless the pain is so great that America balkanizes.

Just a guess…

JPMorgan’s future is quite bright in my opinion. I recently penned an article regarding the Washington Mutual transaction and the subsequent stock offering.

Great post!
Zach

Nice graph there. Like with many sectors, there are good companies and there are troubled ones. Nice to know there are companies still doing well despite what’s going on.

Well, JP Morgan was one of the founders of the federal reserve system so it makes sense.