Tag Archives: stocks

Jamie Dimon’s Obfuscation = JP Morgan’s Guilt?

13 May

I want to draw your attention to one of the most important things Jamie Dimon said to David Gregory in their recent conversation of JPM’s $2 billion proprietary trading loss:

GREGORY: The immediate question, the SEC is looking into this: Did the bank break any laws? Did it violate any accounting rules or SEC rules?

DIMON: So we’ve had audit, legal, risk, compliance, some of our best people looking at all of that. We know we were sloppy. We know we were stupid. We know there was bad judgment. We don’t know if any of that is true yet. Of course regulators should look at something like this, that’s their jobs. So we are totally open to regulators and they will come to their own conclusions. But we intend to fix it and learn from it and be a better company when it’s done.

The question Gregory asked was extremely simple: did you break any laws, accounting rules, or SEC rules? The answer Dimon gave was essentially this: “We’ve looked into it and I know the answer, but I’m not going to say right now what it is.”

Think about all the different things he could have said. Think about why he might have said this. This is bad, folks.

When baseball players are asked to testify before Congress about steroid usage, they obfuscate like this. When cyclists are asked to testify about blood doping, they obfuscate like this. When Jon Corzine responds to questions about MF Global, he obfuscated like this. Why? Because the level of cover-up is so massive that drawing any attention to the truth is overwhelmingly frightening for them. What you see from Mr. Dimon is a high level of fear about what this problem means for him, his bank, America, and the world.

Invest vs. Prepare: Two Necessary Goals

31 Mar

ImageFor people who understand a financial crisis is imminent, there are two categories of response: investing and preparing.

Generally, investing is a way to prioritize the way you save while preparing is prioritizing the way you spend money. Lines can blur between the two. But essentially, the question is this, when you go to buy deodorant, would it be better to buy 12 sticks and be prepared for a time when it may be either unavailable or too expensive, or would you rather by 1 stick and invest the money in a good company’s stock, precious metal, or some other form of savings. The preparations will get you through the hardest part of the crisis; the investments allow you to preserve purchasing power until the crisis ends.

Here’s why this matters.

Let’s say you decide that you know of one good investment that will guarantee profit in the future. You live day-to-day, buying goods only as the need arises. You take all your extra money and buy that stock or precious metal. As the crisis hits, you initially realize you have less and less money to buy investments. Eventually, you have no extra money. You can only get by on what you make. If things get worse after that, what do you do? You have to start selling assets.

So you go to your bank and withdraw cash. You go to your coin dealer and sell your metals. You log on to your online brokerage and sell some stock. See any problems with that? There are many.

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