JP Morgan then and since

Nearly 10 years ago, (in May 2012) I wrote a post (link below) correlating an overreaction in the fall in JP Morgan’s stock price to being similar to that of BP’s decline following an oil rig explosion.

https://robzdravevski.com/2012/05/16/anatomy-of-an-overreaction/

It’s timely to re-visit the anatomy of overreactions as investors are experiencing a new downdraft in stock prices and putting it into perspective when considering a longer investing horizon.

This first chart below shows JP Morgan’s stock performance up to those weeks in May 2012, JP Morgan stock fell 25% (from $44 to $33). It was quite an event to see a major financial institution lose a quarter of its market capitalisation in such quick order.

The stock price is no stranger to volatility but I do think volatility is the price an investor pays for longer term capital gains.

So, there you see a chart where JPM was trading at the same price it was 10 years earlier, with many of peaks and troughs.

Sympathetically, the S&P 500 also paints the same picture between 2002 and 2012.

The next chart shows JP Morgan’s stock price since then.

The result has been a 500% rise with plenty of dips along the way.

A Warren Buffet quote comes to mind, ‘Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years’.

And there lies a reminder that just because a company’s stock price is listed each day, one should be measured when making their next decision.

January 21, 2022

by Rob Zdravevski

rob@karriasset.com.au

Legacy of Benjamin Graham – video

Legacy of Benjamin Graham: The Original Adjunct Professor.
This film, brought to you by the Heilbrunn Center for Graham and Dodd Investing, Columbia Business School, premiered on February 1, 2013 at the 16th Annual Columbia Student Investment Management Association conference.

http://

%d bloggers like this: