Lessons from Jamie Dimon's letters to shareholders

March 1, 2021
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Investing

Always be ready for a crisis

  • in finance, this means having a fortress balance sheet. This is a strategic imperative, not just a philosophy
  • risk is asymmetrical - you can make lots of money in good times, but in the bad times you can go bust
  • don't have too much debt, too much legacy M&A (ie Hertz during covid)
  • lets you make acquisitions during downfalls, when they're cheap
  • creates flexibility
  • once you're too big to fail, it's also a moral imperative

Be obsessed with the truth

  • character = telling the truth, the whole truth, and nothing but the truth
  • never 'shave' the truth. White lies always come back to bite you.
  • if you spin anything, those around you will spin you
  • acknowledge mistakes, and lay out the lessons you learnedthe lessons aren't always simple. no two situations are ever exactly the same.
They say a cat that sits on a hot tin plate will never sit on a hot tin plate again. It also won't sit on a cold tin plate. I don't look at things like there is like one single simple lesson.

Sweat the details

  • The truth is built on details
  • CEOs should drill down, especially at large companies. Benefits of scale can be overwhelmed by lack of attention to detail, of appreciation for how a company actually functions on the front lines
  • Details aren't critical to leadership, but they are to management, and CEOs do both. Leadership is about heart, humility, learning, sharing. Management is about follow up, getting it done, analytics, putting in the time.

Bureaucracy destroys companies

  • Bureaucracy and politics
  • It drives away good people, slows down decision making, kills innovation, and encourages politics.
  • Always strive for speed and accuracy, for eliminating waste, for killing bureaucracy.
  • Speed is achieved by being productive and making fast decisions
  • Accuracy is achieved by attention to detail
  • Once you get there, don't stop. It takes effort to stay lean and mean.
When you get in great shape, you don't stop exercising.

Think like an investor

  • View every decision, like an acquisition or an equipment buy, as an investment. Have an idea of what the ROI is, and what your confidence level is ("think in bets").
  • Play through multiple scenarios in your head (pre-mortem thinking). Be prepared for all of them, including the worst, not just the most likely
  • This lets you make trade-offs. Always think about price vs. value. What may be a brilliant move in one situation may be terrible a week later.

See the big picture

  • You don't exist in a vacuum. Your company doesn't exist in a vacuum.
  • This is particularly obvious now with covid. Do you know the case counts in your city? Are they going up or down? Does your state have contact tracing in place? Where's all your money? In the stock market? In cash? What if the market goes down 50% this year? What if we have rampant inflation for the next 10 years?
  • There are always significant lags in a complex system. Feedback loops take time to kick in. Looking at things too short-term/too insular will surely get you burned.

These all fit together.

  • Seeing the big picture/long-term thinking are easier if you have an investor mindset. Having an investor mindset requires seeing the truth + understanding the details. This helps you prepare for crises you can weather them + thrive in them. All of these are harder to do with too much bureaucracy/politics.

From Jamie Dimon's annual letters to shareholders