JPMorgan Chase CEO Jamie Dimon said on Monday that some financial firms were doing “dumb things” as he outlined his strategy for navigating the investment market in conditions he said reminded him of the pre-2008 crisis years. Speaking at an annual investor update meet, Dimon said the credit cycle is full of surprises.
“There’s always a surprise in a credit cycle,” he said, adding that the “surprise has often been which industry” is hit hardest.
“You didn’t expect utilities and phone companies in ’08, ’09, and this time around, it might be software, because of AI,” Dimon added.
His comments come at a time when software stocks are facing a sharp sell-off in the global markets amid fears that AI will soon replace their business models. On Monday, IBM shares suffered their worst one-day decline since 2000, falling 13.2% after an update by Anthropic's Claude AI.
Responding to a question during the meeting, Dimon said the current situation reminded him of the three years leading up to the infamous 2008 financial crisis, where “everyone was making a lot of money, people were leveraging, the sky was the limit.”
The JPMorgan CEO admitted that some financial firms were “doing some dumb things”. These involved running behind interest income, which is made through lending and investing activities,
“You feel stupid when everyone’s coining money and everyone’s great… it does feel really good,” Dimon said.
However, he did not name the companies that were involved in these activities.
Dimon said that, despite everyone around him making money, he still exercises caution.
“And then when I think about all the factors taking place, I take a deep breath and say 'watch out’.”
Jamie Dimon opens up on US economy
Speaking at the event, the JPMorgan CEO said he was anxious about the US economy, citing higher asset prices and a competitive banking environment like the pre-2008 era.
Even though economists have predicted Donald Trump's tax and deregulatory policies will boost the economy this year, Dimon said his own rule was to consider what could go wrong when expectations were high.
“My own view is people are getting a little comfortable that this is real, these high asset prices and high volumes, and that we won’t have any problems,” he said.
The analyst said it was inevitable that the economic cycle would turn around, which could lead to a wave of borrower defaults that could broadly affect lenders. This, in turn, will affect industries that people will not expect to be impacted, he said.
“There will be a cycle one day… I don’t know what confluence of events will cause that cycle. My anxiety is high over it,” Dimon said. “I’m not assuaged by the fact that asset prices are high. In fact, I think that adds to the risk.”
While investors fear that AI firms like OpenAI and Anthropic could disrupt a lot of industries, the broader S&P 500 is not far from its all-time high.