JPMorgan: peak returns on equity is a poor entry point

The mechanism is the through-cycle return on equity. A multiple of book implies a sustainable return, and paying a peak multiple on a peak return double-counts the same optimism. The return on equity is at a cycle high by the bank's own long-run disclosure, and the multiple is at the high end of its own ten-year range at the same time. The position: no call. This is a name I want to own and not at this level, so there is nothing locked here and nothing for the record to grade. If the entry improves I will say so in a piece that does carry a call. A credit cycle would overwhelm the operating leverage argument entirely, and expense discipline is the first thing to break when revenue falls.