Latest / Stock Picking with Fexingo: Individual Equities, Research, and Building a Concentrated Portfolio / How Jamie Dimon's Bearish Call Is Reshaping Bank Stocks
Transcript
- Lucas: Jamie Dimon said today that he would not buy stocks or Treasuries at current prices. That is a pretty striking statement from the CEO of America's largest bank. Luna: Striking but not totally out of character. Dimon has been warning about the 'storm clouds' for years. So what's different this time? Lucas: The specificity. Earlier warnings were about geopolitical uncertainty, inflation stickiness. Today he pointed directly to valuation — both in equities and in bonds. He said markets are 'pricing in a soft landing that has not yet arrived.' Luna: And JPMorgan's own stock is down half a percent over the past five days. The S&P is off eight tenths. The Nasdaq is off one point six. So the market is not exactly brushing off his comments. Lucas: Right. And here is the thing — Dimon is not just any CEO. JPMorgan is the largest bank in the US by assets. When he says he is being cautious, it affects how institutional investors think about the whole financial sector. Luna: But let's be honest — Dimon has been bearish before and been wrong. He warned about a 'hurricane' in 2022, and the market rallied. So why should we take this seriously? Lucas: Because the difference now is that his actions match his words. JPMorgan has been building its loan loss reserves. They are pulling back on certain types of lending. And the bank is sitting on roughly four hundred billion dollars in deposits that they are not aggressively deploying. Luna: So it's not just talk. The capital allocation is conservative. Lucas: Exactly. And this feeds into a broader theme we have been tracking on this show — the divergence between megacap banks and regional banks. Bank of America, which we covered in episode 122, is also winning in wealth management, but their stock is flat over the past five days. Meanwhile, regional banks are still under pressure from deposit costs. Luna: And Capital One just bet big on Discover. That deal closed earlier this year, and now the market is waiting to see if the gamble pays off. Dimon's caution adds another layer of uncertainty. Lucas: It does. Because if we enter a period where credit conditions tighten — which Dimon seems to be signaling — then a credit card-heavy lender like Capital One could face higher charge-offs. And Discover's network integration is still in early stages. Luna: So what does Dimon's bearish call mean for the broader market? Is he telling us to go to cash? Lucas: Not exactly. He said he would not buy at these prices, but he also didn't say sell everything. The nuance is important. He is essentially saying the risk-reward is unattractive. Which is a very different message from 'get out now.' Luna: And it ties into something we discussed in episode 117 — Berkshire Hathaway sitting on three hundred billion in cash. Buffett is also being patient. So two of the most respected capital allocators in history are signaling caution at the same time. Lucas: That is the key connection. Berkshire's cash pile is now bigger than the entire market cap of most S&P 500 companies. And Dimon's comments suggest he sees similar risks. It's a rare alignment. Luna: But Buffett has been building cash for years. Dimon's warning feels more reactive to current conditions. Do you think it changes anything for how we think about bank stocks specifically? Lucas: I think it reinforces a thesis we have held for a while — that the big money-center banks like JPMorgan and Bank of America are better positioned to weather a downturn than regionals. Their fee income, wealth management, and investment banking arms provide diversification. But if Dimon is right, even those revenue streams could compress. Luna: Let's look at the numbers. JPMorgan trades at around three hundred forty-five dollars. That is roughly twelve times forward earnings. Bank of America at sixty-one dollars is about eleven times. Those multiples are not demanding, but they are not distressed either. Lucas: Right. And the ten-year Treasury yield is still above four percent. So the 'higher for longer' rate environment has actually helped banks' net interest margins — up to a point. The risk is that if the economy slows, loan demand falls and defaults rise. Luna: Dimon specifically mentioned 'geopolitical risks' today — the Iran situation is heating up again. That is a wildcard that doesn't show up in any valuation model. Lucas: It doesn't. And that is what makes his caution resonate. He is not just looking at P/E ratios. He is looking at a world where supply chains could be disrupted, energy prices could spike, and consumer confidence could crack. Luna: So for someone building a concentrated portfolio of individual equities — which is what this show is about — how should they process this? Should they reduce exposure to financials? Lucas: I would say not necessarily reduce, but be more selective. If you own JPMorgan or Bank of America, you own companies that have proven they can manage through cycles. The question is whether you are paying too much for that resilience. Luna: And if Dimon himself won't buy his own stock at these levels, that is a pretty strong signal. Lucas: It is. But keep in mind — Dimon is not allowed to trade JPMorgan stock freely due to insider trading rules. So his personal 'won't buy' statement carries less weight than his institutional stance. Still, the message is consistent. Luna: Speaking of consistency, one thing that stands out is how differently energy stocks are behaving. ExxonMobil is up four point three percent over five days. Chevron up four point six. That is a complete divergence from the broader market. Lucas: That is a great point. While Dimon is warning about risks, energy stocks are rallying on geopolitical tensions and supply concerns. That is a classic 'risk-on' rotation into hard assets. It tells you that parts of the market are still bullish — just not on the same things. Luna: So maybe Dimon's call is not a blanket 'sell everything' but rather a warning that the easy money has been made. And that from here, stock picking matters more than beta. Lucas: Exactly. And that is really the heart of what we try to do on this show. We are not about market timing. We are about understanding individual businesses and their competitive moats. Dimon's comments reinforce that conviction matters more than ever. Luna: It's funny — we spend so much time analyzing companies, and then the CEO of the biggest bank tells us he is standing on the sidelines. It makes you wonder if we are overthinking it. Lucas: Or maybe we are exactly where we need to be. Remember, Buffett also sat out the late 1990s tech bubble. He got criticized for it. Then the bubble burst, and his cash allowed him to buy great companies at distressed prices. Luna: So patience is a strategy. And speaking of patience, a quick note — if these conversations help you think about your own portfolio decisions, and you want to support the show staying ad-free, you can do that at buy me a coffee dot com slash fexingo. Lucas: And it genuinely makes a difference. Even a couple of dollars a month helps us keep the research going and the episodes coming. No pressure — just if you have gotten value from what we do. Luna: Yeah. And now back to Dimon. One more angle I want to explore — do you think his comments are partly strategic? Like, talking down the market could benefit JPMorgan if they want to deploy capital later? Lucas: That is a cynical take, but not unreasonable. If you are a large buyer of assets, you want lower prices. But Dimon has never been that subtle. I think he is genuinely concerned about the risk landscape. Luna: Fair enough. So for our listeners — what is the one takeaway from this episode? Lucas: The one takeaway: pay attention when the most powerful banker in America says he is cautious. But don't panic. Use it as a reason to re-examine your own holdings — especially in financials — and ask if you are being compensated for the risks you are taking. Luna: And if you are sitting on cash like Buffett and Dimon, maybe that is not a bad place to be right now. Lucas: Exactly. Cash is a position. And in this market, it might be the most underrated one.