By Andrew Rosenthal
NY Times Opinion Pages,
June 19, 2012
Jamie Dimon, the
head of JP Morgan Chase, testified before the House Committee on Financial
Services today. This was my favorite exchange:
Rep. Gary Ackerman: What is the difference
between gambling and investing?
Dimon: I think when you gamble you usually
lose to the house.
Ackerman: That’s been my general experience
with investing.
Dimon: I’d be happy to get you a better financial
advisor.
There are many
obvious differences between gambling and investing, but let’s just stick to the
one that Mr. Dimon offered – there is no fix for the house (the bank) when you
invest.
Mr. Ackerman’s
question reminded me of a Louise Story article from last year, on JPMorgan and
Sigma, a troubled pre-crash investment vehicle. “In the summer of 2007, as the
first tremors of the coming financial crisis were being felt on Wall Street, top
executives of JPMorgan Chase were raising red flags about … Sigma,” Ms. Story
wrote. “But the bank chose not to move out $500 million in client assets that
it had put into Sigma two months earlier.”
The result? Sigma
collapsed. The clients lost nearly all their money, and JP Morgan collected
nearly $1.9 billion, according to a lawsuit filed against the company. That’s
just one particularly costly example of the gamblers losing to the house.
No comments:
Post a Comment