Jp Morgan Chase (NYSE: JPM) Thesis

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It also indicates that to some extent the company's strong growth between 2004-2007 was as attributable to industry-wide expansion. So while on the surface, JP Morgan's numbers look exception, they were merely just riding the wave that carried all of the industry's main players.

Likewise, the struggles of 2008 were more directly related to the industry's struggles as a whole than anything specific to JP Morgan. The trading desk lost over $10 billion, compared with a profit of $9 billion the year before. This proved to be the major difference in JP Morgan's year-over-year performance. A study of competitors would likely reveal a similar trend for last year.

The most exceptional thing about JP Morgan's financials is that the impact of absorbing Bear Stearns and Washington Mutual does not appear to have damaged the company in any way. This means that JP Morgan was able to grow substantially last year, and position itself better in both institutional and retail banking, without doing undo harm to its own financial position.
Despite the concerns about underperformance vs. The industry, it seems evident from these purchases that JP Morgan is strong enough to improve its competitive position even during a period of significant economic downturn. This is evidence that the company is strong, despite the troubles last year. In perspective, the troubles of last year still resulted in a profit and JP Morgan's financials are still fairly strong.

Thus, while the metrics do not compare favorably to other banks, there is little cause for concern in with respect to JP Morgan's financial position. They have a strong position in a highly profitable industry. The company has joined the rest of the industry is going through a rough patch relating to the global financial crisis, but it still remains profitable and there is no indication that long-term profitability has been compromised by any recent activity.

Appendices

Stock Price Chart: JPM (from MSN Moneycentral)

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