There has been constant chatter about JP Morgan Chase’s $2 billion loss on the news, but what does it really mean to you with your personal finances? How will it affect you?
If you own their stock, you have experienced at 12% reduction in value, but it will probably recover in time. If you bank at Chase, will your savings rates go down, or borrowing rates go up? Probably not. Is your money still secure? Yes reports say the bank is financially secure, and has been one of the stronger banks throughout the great recession. If Chase is your investment manager, should you be concerned? Probably not, unless you are an institutional investor and Chase helps to manage your multi-million dollar portfolio, you may want to have some long conversations to make sure they are not applying the same investment methodology. So in my estimation, JP Morgan Chase’s loss means very little to the average person’s personal finances. Perhaps the only take away for us is for their loss to serve as a reminder that “If you don’t understand it, don’t invest in it.” It seems that the derivatives employed by Chase were too complex even at their level of sophistication to use wisely.