As the markets were in turmoil and the world worried about a global recession in February 2016, Jamie Dimon was calling for calm.
The JPMorgan Chase CEO stood amid the tumult and said the market was cheap. He backed up his belief by purchasing 500,000 shares of his company's stock, which was tanking at the time.
He never actually called a market trough, but many in the market since then have referred to it as the "Dimon bottom."
Much has been made of the move and deservedly so considering the profit Dimon made on that purchase — what appears now to be a $17 million gain on a $26.6 million investment, just based on the shares purchased that day. That's based on where JPMorgan stock was compared with where it is now. And that doesn't even account for the total profit he made on his holdings.
The Feb. 11, 2016, purchase came at an average price of $53.18. The stock closed Friday at $87.18, equaling a $34 per share gain, or 64 percent.
Bank shares actually saw mediocre performance through much of the year, but a late-year rally fueled by Donald Trump's upset victory in the presidential race sent financial stocks soaring. JPMorgan shares are up 24 percent since Election Day.
The purchase brought Dimon's total holdings in his bank to about 6.75 million shares, which would have been worth $359 million at the time. Given the $34 per share rise in JPMorgan's stock price, those holdings are now worth closer to $588.5 million. That would be a gain of over $229 million.
At the time, there were fears of a global recession brought on by a slowdown in China. Investors worried that Deutsche Bank was in major trouble, the Federal Reserve appeared determined to raise interest rates even amid the difficulties and political uncertainty was running high.
Warren Buffett is fond of saying that he is fearful when others are greedy and greedy when others are fearful.
Read more:
25 Canada Square, Level 33, office 50, Canary Wharf London, E14 5LQ +44 20 3608 6256
World Financial Markets - 0700 17 600 Varchev Exchange - 0700 115 44
Varchev Finance Ltd is registered in the FCA (FINANCIAL CONDUCT AUTHORITY) with a passport in the United Kingdom: FCA, United Kingdom - registration number: 494 045, which allows provision of financial services in the United Kingdom.
Varchev Finance Ltd strictly comply with the statutes of the European directive MiFID (Markets in Financial Instruments). targeting increased efficiency, transparency and uniformity of financial instruments.
Varchev Finance Ltd is authorized and regulated by the Financial Supervision Commission - Sofia, Bulgaria: License number RG-03-02-05 / 15.03.2006
The information on this site is not intended for distribution or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
Disclaimer:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.