3 Banking Truths from JPMorgan & Jamie Dimon

Information you need to know if you are a bank investor or a banker

This isn’t an AA meeting, but I’m Victaurs, and I’ve been investing in banks for 15 years.

Like most things in life, you wake up one day and realize you’ve been doing something for 15 years. You can’t quite recall how it started, but somehow, you’ve accumulated a lifetime of lessons. Wisdom, people say. And, in my case, wisdom about banks and investing.

But what exactly is wisdom? How does one earn that title? To me, it’s not a vague, lofty concept. Wisdom is hard-earned, expert-level knowledge—acquired firsthand through a larger-than-average number of failures. The kind of failures that teach you what works, what doesn’t, and why. But there’s a caveat: those failures must be non-fatal. In investing, as in running a bank, there are no comebacks from going to zero.

Think about the greats in any field, and this principle holds true.

Take Warren Buffett. He’ll tell you about his mistake of buying Berkshire Hathaway in 1962—a failing textile company—and pouring good money into a bad business for far too long. He credits Charlie Munger for opening his eyes to better opportunities. He’s also been candid about missteps in US Airways, IBM, and Tesco. None were fatal, and all became invaluable lessons.

Stan Druckenmiller is another master of the craft who openly discusses his failures. He talks about buying the absolute peak of the 2000 tech bubble, misjudging the creation of the Euro in 1999, and betting too early on a post-2008 recovery. His quote on the latter still echoes in my mind: “I thought I was ahead of the game, but I was early—and being early is the same as being wrong.”

The goal in any field—whether investing in banks, running one, or anything else—is the same: wisdom.

And that begs the question: What wisdom is out there about investing in banks? What lessons can we draw about operating them? Let’s dive in.