Earlier this year, I posted an article entitled Are Dimons Really Forever? What Makes Jamie Run…
Jamie Dimon is an industry superstar. In a recent Vanity Fair article, William Cohan proclaimed him King of Wall Street. Mr. Dimon is widely respected among his peers. I believe Mr. Cohan feels Jamie Dimon to be a modern-day King in the sense that he is the finest and most important person in his sphere – American Wall Street Bankers. Dimon did not inherit his position, he actually earned it. He is the highest paid bank CEO in the country ($23 million), and holds approximately $300 million in Chase stock. Dimon also has a reputation for saying what he feels and thinks. He presents as a no nonsense man-of-action, whose persona projects a person who talks the talk and, yes, walks the walk. And he doesn’t have time for golfing; he considers it a waste of time. He prefers jogging and tennis.
The Big Four (Horsemen)
Chase is one of the Big Four banks, holding nearly 40% of all U.S. customer deposits. In the third week of May 2012, the proverbial hit the fan. Thanks to the efforts of a trader known as the London Whale, Chase lost at least $6.2 billion, perhaps as much as $9 billion. Analysts and other specialists attempted to wash this away by asserting that JPM is a $2.3 trillion mega-operation. Still, losses should never be trivialized or minimized by traders, brokers, or bankers.
I imagine it depends on your asset base, attitude structure and sense of fair play. It’s generally unwise, however, to count (or discount) other people’s money.
The Art & Science of Trading
Trading is a perilous profession. Overseeing traders is perhaps even more dangerous and tricky. In any case, shareholders expect proper stewardship of the companies they co-own. Risk-management models are challenged incessantly on the Street, and in (London’s) the City. Teams of sophisticated experts are required to ensure that trading practices are executed and monitored properly. Error and risk are always part of any financial equation and operation. Financial health is as important as mental and physical health.
Human Factors: Symbolism & Cognitive Dissonance
Trust and money are two of the most important constructs in human experience and enterprise. Jamie Dimon knows full well that the sauce of his industry is confidence. He recently took a road trip in the Midwest and met with Chase staffers throughout the region. This was a smart, go-to-the-front-lines approach. Employees have to feel valued and paid attention to. The power of this kind of symbolic gesture is huge.
Integrity is another key ingredient in the recipe for sauce that Dimon espouses. The integrity of valuations used by traders is fundamental, and they must be trustworthy. JPM will be re-examining these issues going forward.
The London Whale’s trades began to sour in early Spring, 2012. At 270 Park Avenue, Chase’s HQ, the cognitive-dissonance engines must have been humming all summer. The internal corporate conflicts, value- and belief-system challenges, and staff emotional defense-system mechanisms had to have pushed the corporate envelope to a bursting point.
Cognitive dissonance allows us to soothe our wounds, if only in the short term, until we can retreat and regroup more effectively. Recently I posted an article, Where There’s Smoke, There’s Fire which addressed these psychological phenomena. Intellectualization and rationalization can only go so far. Virtue and honor will be tested heavily at this juncture in JPM’s history, and personally so for Mr. Dimon.
There’s No Business Like Show Business
Jamie Dimon testified before Congress in mid-June of this year (Jamie Dimon Goes to Washington). He was forthright, strong, assertive, and direct during the hearings. He didn’t mince words. He demonstrated courage and conviction. He was a modern-day warrior. In the clubby atmosphere of the hearing chambers, Mr. Dimon was well-received. And he ranted and raved when he had to. Again, he is known for being an expressive, no-BS person. All in all, Mr. Dimon played well in Washington. He’s back full-throttle. There’s no business like show business.
Warrior Kings!
History’s warrior kings have included Alexander the Great, Hannibal, Julius Caesar, and Richard the Lionheart. A major, critical thread linking these figures is a genius and passion for logistics.
The term is derived from the Greek adjective logistikos meaning ‘skilled in calculating’. In the Greek, Roman, and Byzantine Empires, officers with the title/rank of logista handled financing, supply, and distribution. Similar to the modern-day quartermaster, the logista was in charge of procurement of supplies, maintenance of equipment, the movement of personnel (evacuation and hospitalization) and the provisioning of facilities and services.
Modern business logistics theory refers to the expert management of the flow of resources needed to meet the requirements of the customer and the corporation. The major categories defining traditional logistics behavior are: production, inventory control, packaging, security, materials handling, inventory, warehousing, and transportation. In terms of the Street, and modern service and internet economies, current logistics categories include: information technology, human resources management, data management and control, telecom communications systems, compliance, compensation and benefits management, marketing, and corporate reputation management.
The word on the Street is that Jamie Dimon is a logistics wizard. He is able to integrate and coordinate seemingly disparate data and systems, and comprehend complex management theory and practice. And he can get down in the trenches to barnstorm and brainstorm with his troops when indicated. He has a feel for people. He can also retreat and regroup when needed. And he’s not afraid of Congress. He’s kind of a down and dirty, working, in your face warrior king.
Historically, in many European cultures, the aristocracy led their own armies. They didn’t hang with the rear guard. They put their money and their life where their mouth was. They had real courage. They were willing to die for their principles and ideas.
Perhaps Leonidas, the King of Sparta, best exemplifies this ideal of the ancient world. At the Battle of Thermopylae, the bloody 300 died in the name of their beliefs and ideals. It’s an interesting coincidence that Mr. Dimon is of Greek descent. The son of Theodore and Themis Dimon, he grew up in a New York City borough, Queens. I suspect that the London Whale episode has made Jamie Dimon wiser, hardier, more humble, and more down to earth. This is just a working psychologist’s gut feeling, a hunch coming from years of working with Wall Street personnel.
Crises produce epiphanies in mortals, and, one would surmise, in the gods as well. I suspect that the London Whale’s breach raised many alarms and sirens at Chase, and specifically for Jamie Dimon, on an existential level. Human nature and experience require wake-up calls regardless of your status, achievements, or zip code. Readers will have to think for themselves, and determine if, in fact, Jamie Dimon is a warrior king. In terms of temperament and style, he reminds this writer of Ray Dalio, CEO of Bridgewater Associates. Dalio views error as opportunity through which to perfect operations. He is absolutely solutions-driven. He has a deep understanding of human nature and foibles. He, too, says what he thinks and feels.
Going Forward…
The London Whale’s breach has inspired this blogger. Codes were violated, trust was tarnished. Going forward, posts will explore the application of Six Sigma to the Street, The Rules of Engagement for Traders, and how an appreciation for neuroscience data is essential for traders to function optimally. All of these directions can contribute to the sustainability of the companies we co-own.