JPMorgan Chase CEO Jamie Dimon said on Monday that some financial firms were doing ‘dumb things’ and revealed his strategy while navigating the investment market at a time he said reminded him of the pre-2008 crisis years.
Speaking at an annual investor update meet, Dimon noted that the credit cycle is full of surprises.
“There’s always a surprise in a credit cycle,” the JPMorgan Chase CEO said, adding that the “the surprise has often been which industry” is impacted most.
“You didn’t expect utilities and phone companies in ’08, ’09, and this time around, it might be software, because of AI,” Dimon added.
His comments come at a time when software stocks are experiencing a bloodbath at global markets amid fears that AI will soon replace what these companies do. On Monday, IBM shares suffered its worst crash since 2000, falling 13.2% in a single day, over an update by Anthropic’s Claude AI.
Responding to a question during the meeting, Jamie Dimon noted that the current situation reminded him about the three years leading up to the infamous 2008 financial crisis where “everyone was making a lot of money, people were leveraging, the sky was the limit.”
The JPMorgan CEO admitted that some financial firms were “doing some dumb things”. These involved running behind interest income, which is made through lending and investing activities,
“You feel stupid when everyone’s coining money and everyone’s great… it does feel really good,” Dimon said.
However, he did not name the companies who were involved in these activities.
Dimon said that despite everyone making money around him, he remembers to exercise caution.
“And then when I think about all the factors taking place, I take a deep breath and say ‘watch out’.”
Jamie Dimon opens up on US economy
Speaking at the event, the JPMorgan CEO said he was anxious about the US economy, citing higher asset prices and a competitive banking environment like the pre-2008 era.
Even though economists have predicted Trump’s tax and deregulatory policies will boost the economy this year, Jamie Dimon said his own rule was to consider what could go wrong when expectations were high.
“My own view is people are getting a little comfortable that this is real, these high asset prices and high volumes, and that we won’t have any problems,” he said.
The analyst noted that it was inevitable for the economic cycle to turn around, which could lead to a wave of borrower defaults that could broadly affect lenders. This in turn will affect industries that people will not expect will get impacted.
My anxiety is high over it. I’m not assuaged by the fact that asset prices are high. In fact, I think that adds to the risk.
“There will be a cycle one day… I don’t know what confluence of events will cause that cycle. My anxiety is high over it,” Dimon said. “I’m not assuaged by the fact that asset prices are high. In fact, I think that adds to the risk.”
While there are fears among investors in terms of how AI firms like OpenAI and Anthropic could disrupt a lot of industries, the broader S&P 500 is not far away from its all-time record level.