This CEO With a Perfect Pedigree Just Beat Expectations Again

Many supposed "superstar" CEOs should credit their company's success to luck rather than skill. For example, oil company CEOs look great when the price of a barrel marches to $100 and cash rolls into their companies' coffers... But it didn't take skill to get it there.

Studies – including a 2001 paper published by Marianne Bertrand and Sendhil Mullainathan – have shown that's most often the case... that CEOs get paid for luck just as much as they do for running the company well.

But when you find the rare talent, you've got to stick with it.

Jamie Dimon has had a great career from the beginning.

He turned down offers from Goldman Sachs and other big-name banks to go to work with Sanford Weill at American Express. They moved together to Commercial Credit and grew the company to the point it was able to buy out rivals Primerica and Travelers Insurance to form Travelers Group.

Then Travelers went on to merge with Citicorp to form Citigroup.

Dimon wasn't chosen to run the new entity, but maybe he should've been...

Citigroup never recovered from the 2008 financial crisis. Had the company picked Dimon to run the bank, it may have avoided this fate.

As for Dimon, he didn't take on the same leverage that led to major losses for Citigroup shareholders in the Great Recession. And this helped his company handily beat the financial industry.

That's one reason Dimon's firm beat the sector's return nearly eight times over. You don't do that with luck.

And today we're sharing the one sure way to invest alongside Dimon...

Since 2006, he has run JPMorgan Chase (NYSE: JPM).

To a casual observer, the names of the big Wall Street banks tend to run together. The JPMorgans, Goldman Sachs, Morgan Stanleys and so on sound like similar businesses in close competition. They seem pretty much the same.

To anyone watching closely, though, JPMorgan dominates the finance industry.

Banks can be a lot of things. They can work with consumers, underwrite public stock offerings, trade for profits, or lend money. Most banks focus on a few key areas and dabble in others. But JPMorgan is in the top two or three of nearly every category.

So far in 2019, JPMorgan collected $4.9 billion in advisory fees as an investment banker. That's good for the top spot... ahead of even Goldman Sachs.

For consumer loans and credit cards, JPMorgan is the biggest. When it comes to commercial lending or residential loans, JPMorgan comes in third.

For consumer deposits, JPMorgan ranks first again with $1.3 trillion.

Not only is JPMorgan one of the biggest banks, it's also one of the most profitable.

The main measure of a bank's profitability is return on equity ("ROE"). In a simplified sense, this measures how much profits the bank earns from the equity its shareholders have contributed to give the bank a capital base.

JPMorgan consistently beats the other big banks in posting a healthy ROE. The only top 10 bank that beats it is U.S. Bancorp.

Better yet, it's still growing...

JPMorgan's ROE has increased in each of the last seven quarters. That's because revenue grew 27% and earnings grew 52% over this period.

Again, when you look through all of JPMorgan's business lines, nearly all of them have revenue and income headed in the right direction.

And Dimon isn't taking big risks to fuel that growth. JPMorgan's capital ratios fall in line with the industry and have been rising.

The company has an A- credit rating from Standard and Poor's (a better rating than Goldman Sachs, Morgan Stanley, and Citigroup).

When you look at the cost of insuring JPMorgan's bonds, you'd pay less to do so for JPMorgan than any of the other banks. In other words, traders think it's the safest bank in the market.

When the economy is strong, more people borrow and spend, and banks get to lend out more capital. And a stronger economy means that borrowers are more likely to have the money to pay back what they owe.

Right now, the U.S. economy is in pretty good shape. Consumer confidence remains strong, and employment data show a solid job market.

This is great for banks...

The strength of JPMorgan's business was highlighted in its most recent quarterly report.

Both earnings and revenue topped estimates. Fixed-income trading revenue and net interest income also beat expectations.

The strong results propelled JPMorgan's stock to a fresh all-time high. On a longer-term basis, JPMorgan's share performance is just as impressive. Over the past five years, the stock has more than doubled:

Dimon and his management team have a strong pedigree. JPMorgan has become one of the best-run banks on Wall Street. Given the relative strength of the U.S. economy, JPMorgan is well-positioned to continue succeeding.

Sometimes investing is simple.