From the good people at Forbes: The penalty for laying a big egg on Wall Street used to be a
10 percent markdown. Now, it’s 20
percent or more. Facebook as a new issue
shoulda come in at $28, not $38, and it woulda closed in the low thirties with
no Congressional hearings. Prior to its
London caper, JPMorgan Chase sold at 10 times earnings power, now an also ran
carrying a 7 multiplier.
Psychologists explain this as the syndrome where you fill
too much space and end up battered black and blue. Fifty years ago, you couldn’t find financials
in terms of GDP. Wall Street was a tiny
village. Now it’s 9 percent of GDP, 15
percent of the S&P 500 Index with a boatload of embedded regulators and
dozens of congressmen vying for airtime and tomorrow’s headlines.
JPMorgan as a whale got noticed, then harpooned, not for $3
billion in paper losses, but $40 billion in market value blubber. This is an enormous comeuppance. Call it 25 percent on a market capitalization
over $170 billion. The stock’s now
worth $125 billion and has given up all of its 32 percent gain this year……
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