TARNISHED J.P. MORGAN HOLDS LUSTER FOR INVESTORS $JPM $C $BAC

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It was not long ago that Jamie Dimon, CEO of J.P. Morgan, was considered the golden boy of American banking. After all, he had guided the bank mostly unscathed through the financial crisis of 2008. Then last year, the London Whale crisis erupted. Bruno Iksil, a London-based J.P. Morgan trader known for his outsized positions, hence the nickname London Whale, accumulated a big credit default swaps (CDS) position. Upon disclosure of a trading loss in this position, J.P. Morgan stock fell out of bed as shown on the chart.

Click here for an annotated chart of J.P. Morgan.

In the interest of full disclosure, In my analysis, the fall in the stock last year was a buying opportunity. I described my rationale for accumulating the stock on the dip in a June 13, 2012, MarketWatch column, addressing why Dimon’s testimony didn’t matter. I recommended to my subscribers to accumulate the stock, our cost basis is $34.14, since then the stock has traded as high as $56.93. We have taken partial profits along the way and my long-term target has been $65.00-$70.00.

Lately, J.P. Morgan JPM has become the subject of a number of investigations, and there have been calls for the resignation of Dimon. In my opinion, if there is a dip in the stock, it will be a buying opportunity.

Legal problems

So far this year, J.P. Morgan has paid out $3.68 billion in four separate settlements; $920 million for London Whale, $80 million in fines, and $309 million in refunds related to credit-card customers, $410 million related to electricity markets, and $1.96 billion related to foreclosures.

See also  481% GAIN — RAISING TARGET ON JPMORGAN CHASE (JPM)

In addition, more startling is that J.P. Morgan has spent a total of $17.3 billion on litigation in the time period of 2010–2012…Read more at MarketWatch

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