May
14
2012
We’ve all read about the $2 BILLION loss that JP Morgan-Chase suffered and the trading that led to the loss. I’ve been reading the news reports as well as the op-ed stuff about how this kind of trading was supposed to be illegal after the financial crisis, but how the regulations and the legislation had been watered down given the strong bank lobby … and especially the head of JP Morgan-Chase. He’s derided the kind of regulation that would have prevented this practice, actually been unkind about the people who are for it.
Now, here’s the question. If you own stock in JP Morgan-Chase and, let’s assume, you have a good gain on it since you’ve had it quite a while (and, shall we also mention that it avoided the same difficulties that drove other banks into default and government bailouts – until now) should you sell?
The stock fell almost 10 percent on the news of the bank’s loss and the behavior of its executives. But it will recover and it’s still way above what it had been a year ago, etc. Thus, this really isn’t an economic choice unless you think the market will continue to beat up on financial institutions in general and JP Morgan-Chase in particular.
It’s an ethics, morals question. Do you want to own stock in a company that condoned this kind of trading? Are you willing to (1) pay the capital gains tax if you sell, and (2) forgo any possible upside to the stock? Are you?
Now, here’s the question. If you own stock in JP Morgan-Chase and, let’s assume, you have a good gain on it since you’ve had it quite a while (and, shall we also mention that it avoided the same difficulties that drove other banks into default and government bailouts – until now) should you sell?
The stock fell almost 10 percent on the news of the bank’s loss and the behavior of its executives. But it will recover and it’s still way above what it had been a year ago, etc. Thus, this really isn’t an economic choice unless you think the market will continue to beat up on financial institutions in general and JP Morgan-Chase in particular.
It’s an ethics, morals question. Do you want to own stock in a company that condoned this kind of trading? Are you willing to (1) pay the capital gains tax if you sell, and (2) forgo any possible upside to the stock? Are you?
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