Behavioral Finance at Jpmorgan Essay
JANUARY 18, 2007
MALCOLM BAKER ALDO SESIA JR.
Behavioral Finance at JPMorgan
Behavioral finance is the study of how investors make decisions—and how these decisions affect stock prices and broad market movements. Investors are human, and humans aren’t perfectly rational. When they buy on emotion, they not only jeopardize their own investment plans, but also create opportunities for others in the market.1 In the three years since a 2003 launch in the United States, JPMorgan’s behavioral finance products had attracted new assets at a rapid pace. The Asset Management unit at JPMorgan had been a pioneer in what it termed “Behavioral Investing.” It had over a decade of experience since 1992 when it offered an initial retail …show more content…
JPMorgan Chase & Co. was a leading global financial services firm with assets of $1.3 trillion and operations in more than 50 countries.4 The company’s earliest predecessor organization dated back to 1799. Key transactions which led to the formation of JPMorgan Chase included the 2000 merger between JPMorgan and Chase Manhattan, combining four of the largest and oldest money center banking institutions in New York City (JPMorgan, Chase, Chemical, and Manufacturers Hanover) into one firm. In 2004, the company merged with Bank One and acquired Highbridge Capital Management, a New York-based hedge fund with $7 billion under management.5 The company was organized into six major business segments under three brands: The Investment Bank and Asset Wealth Management (JPMorgan brand), Treasury & Securities Services (JPMorgan Chase brand), Commercial Bank, Card Services, and Retail Financial Services (Chase Brand). (See Exhibit 1 for financial summary.) Under the JPMorgan brand, the Investment Bank provided clients—corporations, financial institutions, governments and institutional investors worldwide—with merger and acquisition advice, capital raising, restructuring, risk management and research. In