Jamie Dimon has run JPMorgan Chase as CEO for 20 years, and under his leadership, it’s become the largest bank in the world by market capitalization. But Dimon’s business savvy started long before he ran JPMorgan, and even before he attended Harvard Business School. According to Dimon, his education in investing started playing a game with his father—and it was a bit tougher than Monopoly.
On a recent episode of The Master Investor Podcast with Wilfred Frost, Dimon recalled how his father, a stockbroker, fostered his interest in finance by challenging him to analyze companies’ annual reports.
“He would give me an industry you might know something about, like a restaurant,” Dimon explained. “And say, ‘Okay, look at this. Look at the history. Read the annual report. Study the industry if you want. What would you pay for the stock?’”
“It’s brutally hard,” he added, saying the game also taught him “the why.” His estimates would often be far off from the reality of a company’s value due to hard-to-identify factors: “The accounting is bad, or the people are bad, or there are other reasons people will not pay,” he said, which often led him to conclusions far over or under.
“You could still do this exercise, and I would still be humbled by it,” Dimon said.
‘Don’t blow up’: Another childhood lesson in business
Beyond those simulations, Dimon put his investing skills into practice at an early age, buying his first stock at age 14, in 1972. That meant he was a teenager when he faced his first stock market crash. In the next two years, the market declined by 45%.
Dimon recalled the experience on the Acquired podcast last year. “All the limousines on Wall Street were gone. Restaurants were being closed,” he said. “Markets move, violently.”
Dimon said the reality check led him to his “don’t blow up” philosophy, to never get too comfortable assuming that the market won’t shift. It’s helped him weather financial crisis after financial crisis, including the 2008 recession, which JPMorgan emerged from largely unscathed.
“History does rhyme,” Dimon said. When it comes to finance, it’s important to remember the wild fluctuations markets have had in the past, so you’re always prepared for the worst. “Those things do happen. And the point isn’t that you’re trying to guess them. The point is you can handle them, so you can continue to build your business.”