The Number Of Days In Which JPM Lost Money In All Of 2013 Is...

Tyler Durden's picture








Well, what did you expect.

However, there's more.

First, the reason why the familiar histogram showing the trading days profits (we would say losses but TBTFs don't lose money in the New Normal) such as the one seen here is no longer present, is because JPM has decided to no longer show it as of this quarter.

Prior to the fourth quarter of 2013, the Firm disclosed a histogram which presented the results of daily backtesting against its daily market risk-related gains and losses for positions included in the Firm’s Risk Management VaR calculation. Under this previous presentation, the market risk related revenue was defined as the change in value of: principal transactions revenue for CIB, and Treasury and CIO; trading-related net interest income for CIB, Treasury and CIO, and Mortgage Production and Mortgage Servicing in CCB; CIB brokerage commissions, underwriting fees or  other revenue; revenue from syndicated lending facilities that the Firm intends to distribute; mortgage fees and related income for the Firm’s mortgage pipeline and warehouse loans, MSRs, and all related hedges; and market-risk related revenue from Asset Management hedges; gains and losses from DVA were excluded.

If JPM had used this old methodology, JPM would have shown the following: "Under this prior measure there were no VaR band breaks nor any trading loss days for the year ended December 31, 2013."

Needless to say, this has never happened before.

So what's wrong with no trading losses: after all a bank works mostly on a flow basis, right, so the customers take on principal risk, right? Wrong.

We already know for a fact that JPM's primary business model until the beaching of the London Whale was abusing excess deposits and using them precisely as prop trading capital. However, for the best picture of the firm's Old Normal trading day win/loss distribution, we go back to JPM's trading day histogram for 2008. This is what it should look like.


Perhaps it is out of shame that JPM did not want to disclose the fact that based on an apples to apples methodology the firm no longer loses money. Any money. Ever. So what did JPM do? Why it introduced oranges of course. From the just released 10-K:

Effective during the fourth quarter of 2013, the Firm revised its definition of market risk-related gains and losses to be consistent with the definition used by the banking regulators under Basel 2.5. Under this definition market risk-related gains and losses are defined as: profits and losses on the Firm’s Risk Management positions, excluding fees, commissions, fair value adjustments, net interest income, and gains and losses arising from intraday trading. The following chart compares the daily market risk-related gains and losses on the Firm’s Risk Management positions for the year ended December 31, 2013, under the revised definition. As the chart presents market risk-related gains and losses related to those positions included in the Firm’s Risk Management VaR, the results in the table below differ from the results of backtesting disclosed in the Firm’s Basel 2.5 report, which are based on Regulatory VaR. The chart shows that for the year ended December 31, 2013, the Firm observed two VaR band breaks and posted gains on 177 of the 260 days in this period.


In other words when one excludes such trivial things as "f,ees, commissions, fair value adjustments, net interest income, and gains and losses arising from intraday trading" and why one would exclude gains and losses from intraday trading when the bulk of JPM's revenue comes precisely from this is beyond us, JPM did in fact lose money. It just didn't lose money when everything is included.

And that, among all the other well-known reasons, is why Jamie Dimon is once again richer than you.

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El Hosel's picture

Make that Organized Government approved Crime.... This ain't no ordinary crime, Bitchez.

Conax's picture

I was taught that hard work would see you through to success...

Until I was informed by a mid-level manager that 'washing machines work hard, and we don't pay them at all.'

No.  It is lying, cheating, ass-kissing and back-stabbing that gets you ahead. We need to stop lying to the kids.  Get busy stealing, kiss that ass, back stab that old fart over there, take his job.

Bring the boss a jug for Christmas, you'll go far.

White collar crime is cool.  The judge will understand, after he gets his grease.

Jack of All Trades's picture

That's why Jamie is richer than you

RobinHood73's picture

REPO 105 Baby. Theres gotta be some mechanism these guys are employing  for them to diffuse/tranfer risk  of  accumulated mark-making positions during regular hours int osome off balance sheet entity or similar . That way the trading arm ALWAYS mathemetically wins, and the "sidepocket" then diffuses and manages the risk


RobinHood73's picture

Someone needs to uncover what this risk transference mechanism is.... Operating under the radar is  iwhat keeps this whole charade going. Likely a whistleblowing insider

Ban KKiller's picture

Basic accounting fraud. That's it.

BullyBearish's picture

The more they steal from us the less we have to give them

BrigstockBoy's picture

A firm by the name of Chase
Was nothing but a disgrace
They rig and they lie
They'll wait 'till you die
Before stealing your soul, just in case

SumSUN's picture

On a long enough timeline everyone's days of loosing money drops to zero. ?

pavman's picture


tarsubil's picture

Damn. I guessed a negative number.

Zymurguy's picture

But were their clients void of losses?  I doubt it.  These big firms manipulate their clients, no completely take advantage of thier clients in order to prop themselves up.

Anonymouse's picture

Hence the term "prop trading"

SillySalesmanQuestion's picture

It's all so Enronesque...

BudFox2012's picture

It is simply shocking to me that the company that writes all the rules and controls everyone who enforces the rules, did not lose money any day last year... </sarc>

maneco's picture

All it means is that the markets are rigged and they probably front run all their clients' orders. Not even Jesse Livermore made money everyday.

Anonymouse's picture

Impressive. Jamie Dimon should get a pay raise.

Luckhasit's picture

"And that, among all the other well-known reasons, is why Jamie Dimon is once again richer than you."

Heh, that is why we come to ZH.

coastalwn's picture

from this day forward... winning is losing and losing is winning.....  see anyone can change the f cking rules... credit my account jamie...  right f cking now!!!   i start trading after lunch...

LordAarioc's picture

They use artificial intelligence to trade and they got it from the ETS that have been helping the governemnt since Roswell. There said it.

grekko's picture

Basel rules? Like Mark to Unicorn?

Joebloinvestor's picture

Pretty fucking good business model.

After paying fines (since NO ONE EVER GOES TO JAIL or is BANNED FROM THE INDUSTRY).

Count the profit (there will always be that!) and give bonus.

robnume's picture

Doin' gods work, huh? Yes they are.

dns_di's picture

It just didn't lose money when everything is excluded?

q99x2's picture

Yeah but he has to murder more and more employees with each passing quarter.

ReactionToClosedMinds's picture

man, even Jon Corzine is ticked off over this!

AdvancingTime's picture

To say the market is rigged is an understatement. After over 30 years of trading commodities I will flat out state without any reservations that lies and manipulation run rampant. If you think anyone is looking out for the small independent trader you are wrong. An unholy alliance of the Federal Reserve, the government, and the too big to fail has left the rest of us in a precarious position. For the big boys, its insider information and computer trading, this includes computing patterns that exploit where stops are placed, this improves their ability to wash the weak out of their positions. More on this subject int he post below,

are we there yet's picture

There is a God's nail gun joke in here somewhere.

highwaytoserfdom's picture
messystateofaffairs's picture

Clearly this is because they are geniuses. They come from a tribe that produced Einstein and the most Nobel prizes. We are all so fortunate to have them. Excuse me now I have to run down to GS and give them all my money to invest.