Feeling sorry for JPMorgan Chase (NYSE: JPM) CEO Jamie Dimon is easy these days. The poor guy is head of the most successful bank in the universe and he is scared to death of a humble cryptocurrency called Bitcoin.
Dimon keeps going out of his way to bash the cryptocurrency. In fact, he seems somewhat obsessed by it, if CNBC’s reporting is anything to go by.
“If you’re stupid enough to buy it, you’ll pay the price for it one day,” Dimon said of the popular altcoin at the Institute of International Finance Conference on Friday 13, 2017. Then seemingly realizing that his Bitcoin bashing is starting to sound silly, tried a new tactic.
“Who cares about bitcoin,” Dimon quipped. “The world economy is so big.” He also admitted that calling Bitcoin a fraud was stupid, and seemed shocked that his daughter admitted to owning two Bitcoins.
Dimon Hates Bitcoin but loves Blockchain and Cryptocurrencies
The strangest aspect of all this is that Jamie Dimon is something of a cryptocurrency geek. He just does not like Bitcoin, which is an understandable sentiment.
“God bless the blockchain,” Dimon said. “Cryptocurrencies, digital currencies, I think are also fine.”
“JPMorgan moves $6 trillion around the world every day, and we don’t do it in cash, it’s done digitally,” Dimon added. “If it can be done digitally with the blockchain, so be it. But it will still be a dollar cryptocurrency.”
Dimon also admitted that he is a fan of cryptocurrencies but not Bitcoin. Strangely enough, he is not talking any about any other altcoins such as Ethereum, which JPMorgan Chase has supposedly experimented with. Instead, Dimon seems to dislike nongovernment crypto.
“What I have an issue with is a non-fiat cryptocurrency,” Dimon said. “So crypto sterling, euro, yen, they are all fine. I don’t personally understand the value of something that has no actual value. You all can do whatever you want and I don’t care.’
That sounds as if Dimon might be in favor of NEO if it really is backed by the People’s Bank of China (PBOC). He might also appreciate Ethereum-based national cryptocurrencies like that being considered in Estonia.
Is Jamie Dimon Boosting Bitcoin’s Price?
Bitcoin owners should encourage Dimon to keep badmouthing their altcoin. Every time Dimon opens his mouth, the currency seems to gain value. Back on September 17 just when Dimon started bashing them, a Bitcoin was trading around $3,095. By 17 October Bitcoin was trading at $5,616.01 a gain of $1,821.43 or 48%.
That means Dimon’s daughter; whom he called stupid for owning Bitcoin, is laughing all the way to the bank. Perhaps we should not be taking investment advice from Dimon or buying cryptocurrencies every time Dimon bashes them.
This still belies the question why is Dimon so scare of Bitcoin? My guess is that the poor man is paranoid about uncontrolled speculation. He lived through the Great Meltdown of 2007 and 2008 and the experience scarred him. Much as memories of the Great Crash of 1929, scarred the generation that lived through it.
Perhaps there is such a thing as financial or investment Post Traumatic Stress Disorder (PTSD) and Dimon is suffering from it. Others might wonder if Dimon knows something about the financial system we do not or if something is wrong at his bank.
Business Booms at JPMorgan Chase
The strangest part of all this is that JPMorgan Chase is doing great. Its revenues grew by $3.18 billion during the first three quarters of 2017.
Chase started 2017 with revenues of $95.67 billion that rose to $98.85 billion on 30 September 2017. Those revenues are approaching the all-time high of $99.13 billion achieved in June 2013, and will probably be over $100 billion in December.
Income is also exploding at JPMorgan, it reached $26.94 billion in September 2017, up from $24.73 billion in December 2016, and $23.44 billion in September 2016. JPMorgan Chase is not only growing, it is making a lot of money. The financial figures indicate the 26.58% profit margin reported on 30 September is for real.
JPMorgan is swimming in Cash
It is also easy to see why Dimon loves finance currency so much, JPMorgan Chase is swimming in it.
The latest financial numbers demonstrate that JPMorgan has vast amounts of cash. Highlights of the cash-rich environment at Chase include:
- A free cash flow of $7.012 billion on June 30, 2017.
- Cash and short-term investments of $457.80 billion on September 30, 2017. Whoa.
- Assets of $2.563 trillion on 30 September 2017.
- Generating $72.02 billion in cash from financing on June 30, 2017.
- $30.08 billion in cash from operations on June 30, 2017.
- A market capitalization of $338.37 billion on October 17, 2017.
- An enterprise value of $250.29 billion on October 17, 2017.
Such numbers will undoubtedly rekindle the debate about “too big to fail” banks and give populist politicians such as U.S. Senator Bernie Sanders (I-Vermont), President Donald J. Trump (R-New York) and Jeremy Corbyn plenty of ammunition for arguments. Those sentiments might be another reason why Dimon fears Bitcoin so much.
Dimon is afraid that he and other big bankers will get blamed if there is a big Bitcoin crash and a lot of average people lose their shirts. He understands that even well-educated people would rather blame conspiracies than their own fallibility for investment losses.
Is JPMorgan a Good Investment?
Such fears will have many wondering if JPMorgan Chase is a good investment. I would answer yes to that question.
During the third quarter 2017, JPM owners were rewarded with a return on equity of 11.7%. They also took home a 56¢ dividend on October 5, 2017, a 6¢ increase over the 50¢ paid on out on 3 July 2017. This makes Chase a good growth stock, and a great dividend stock.
I would say Chase is pretty fairly valued at the $95.86 a share it was fetching on October 13, 2017. Those who own it will not be disappointed, although I am sure a lot of them wish they had been holding Bitcoin over the past month.
Dimon might be right about Bitcoin, its price is crazy, but his bank is a good investment. Smart investors should consider adding it to their portfolios.