JPMorgan (JPM) is long from $34.14. It is trading at $150.48 as of this writing. This represents a gain of 340%. JPM is the bluest of blue-chip banks. JPM is in the Model Portfolio.
JPM reported better than expected earnings and better than the whisper numbers.
The company also pays a dividend of 2.38%.
Key Points
Here are the key points,
- Last year JPM set up reserves for bad loans that were anticipated due to coronavirus.
- The Fed stepped in with money printing, almost zero interest rates, and a number of other programs.
- First Trump and then Biden stepped in with free money and heavy borrowing.
- As a result of the foregoing, the anticipated losses on loans have not occurred.
- Now JPM is taking some of the money from those reserves and they are being added to earnings.
- Once you understand the foregoing, it is easy to see that the reported earnings are really not as good as they seem from the headline numbers. It is important for investors to always dig below the surface.
- Technically the stock is overbought and thus it is not appropriate to buy right here in spite of the excitement about the earnings and Wall Street’s bullishness about the stock.
- Investors need to have discipline, not be driven by emotions of FOMO (fear of missing out), and be patient to buy only when the setup is right. For those who are still trying to develop these traits, the easiest way to become a great investor is to attend the Bullet Proof Your Portfolio and Increase Your Returns seminar.
‘Buy Now’ Rating
For those following the ‘Good Way,’ the ‘Buy Now’ rating is ‘NO.’
Zones
For those following the ‘Best Way,’ the buy zone is $131.11 to $143.68. The very long term target zone is $205 to $220. The recommended position size is 20 – 40%.
What To Do Now
Those in JPM may consider continuing to hold.
Those not in the stock may follow the parameters given above.
Cautions
- JPM, BAC, and C are large money center banks. There are reasons to own all three of them.
- If you have a large portfolio, it is appropriate to buy JPM, BAC, and C. However make sure you are comfortable with a position size of all three combined.
- If you have a small portfolio, consider owning only one of the three. C has the most upside potential.
- If you do not own any of these banks and can own only one, C is the best choice at this time.
- Please note that there is a new development in C. Wall Street is viewing this development as positive. However, in our view, this is a negative development. We will be lowering the target zone for C. Even with the new lower target zone, C still has the most potential.
A special note to new subscribers: If you are not yet ready for the sophistication of the site and the ‘Best Way’, consider starting with the ‘Good Way.’ Please study Getting A Running Start and Trade Management Guidelines. Please note that this is a very long term position. The plan is to accumulate more if the stock goes down, ultimately up to 100% of full core position size.
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