Dear Reader,
Good morning.
Simmy Adelman here with Behind the Markets.
This week, the most powerful banker in America said something every investor needs to hear.
Jamie Dimon — chairman and CEO of JPMorgan Chase — sat down for an hour-long interview with Wilfred Frost on The Master Investor Podcast.
His message was blunt.
He would not buy stocks at current prices.
He would not buy long-dated Treasury bonds either.
And he thinks the risks facing the global economy are bigger than almost anyone is pricing in.
"Personally, No."
When Frost asked Dimon directly whether he would buy long-dated Treasuries, his answer was two words.
"Personally, no."
That's a remarkable statement from the CEO of the nation's biggest bank.
Long-dated Treasuries are supposed to be the safest investment on earth!
The flight-to-safety trade.
The thing you buy when everything else feels risky.
And the man running $3.9 trillion in assets says he won't touch them.
His reasoning is straightforward.
Even if inflation falls back to the Fed's 2% target, Dimon thinks the 10-year Treasury yield should sit around 4% to 4.5%.
It's currently at 4.6%.
Which means there's almost no upside in bond prices from here — and meaningful downside if yields keep rising.
Government deficits are ballooning.
Defense spending is surging globally.
And the Fed under Warsh has shown no appetite to cut.
In that environment, Dimon sees long bonds as a bad bet.
On Stocks
His stock market view is slightly more nuanced — but not by much.
Dimon said he would consider an individual stock if it was "a great investment."
But he wouldn't buy the broad S&P 500 at current valuations.
The risks he cited: geopolitical instability from the wars in Ukraine and the Middle East, rising US-China tensions, and mounting government deficits at a time when military spending is accelerating everywhere.
"I do think those risks are probably bigger than other people think," he said.
This is the same Jamie Dimon who posted the largest quarterly profit in JPMorgan's history just two weeks ago.
He's not pessimistic about his own business.
He's pessimistic about the price you're being asked to pay to own the market right now.
That's an important distinction.
The AI Comment Nobody Is Talking About
Here's the part of this interview that I think got buried under the stocks and bonds headlines.
When Frost asked Dimon about AI, he said something that should make every investor stop and think carefully.
He compared today's AI spending boom to the early days of the internet.
"The amount of money being spent is huge," he said. "Will it in total pay off? Probably, just like the internet did."
That sounds bullish.
But then he said the quiet part out loud.
He noted that the biggest early winners of the internet era — Yahoo, Netscape, AOL — didn't end up being the long-term winners.
Google didn't launch until 1998.
Facebook didn't exist until 2004.
The companies that ultimately captured most of the internet's economic value weren't even on anyone's radar during the height of the early boom.
Think about what that means for the current AI landscape.
The companies everyone is betting on today — the ones trading at 30, 40, 50 times revenue — may not be the ones that ultimately win.
The real winners might not have gone public yet.
They might not even exist yet.
This is one of the most important things anyone has said about AI investing all year, and it got about fifteen minutes of attention before the next headline came along.
This Has Happened Before
We’ve been talking about this exact dynamic for months.
Not the specific Dimon quote — but the underlying idea.
That in every great technology revolution, the early infrastructure winners are different from the application layer winners, which are different again from the companies that ultimately extract the most economic value.
In the railroad era, the companies that built the tracks often went bankrupt.
The companies that figured out what to ship on them became dynasties.
In the internet era, the companies that built the pipes — Cisco, WorldCom — got destroyed.
The companies that figured out what to do with the pipes — Google, Amazon, Facebook — became the most valuable companies in human history.
Dimon is saying the same thing about AI.
The spending boom is real.
The payoff is probably real.
But the winners haven't all revealed themselves yet.
And at current valuations, you're being asked to pay as if they already have.
And that's exactly the insight I've been spending a lot of time on lately.
Because if Dimon is right — if the real winners of the AI era haven't fully revealed themselves yet — then the smartest place to be isn't betting on who wins the model race.
It's owning the companies every major AI player depends on regardless of who wins.
The picks and shovels of this revolution.
We’ve been digging into exactly this, and just put together a full report on what we think is the single most important AI investment opportunity of the decade — a company sitting at a chokepoint so critical that Apple, Nvidia, and the US government are all already behind it.
The Bottom Line
When the CEO of the world's largest bank says he wouldn't buy stocks or bonds at current prices, that is not background noise.
That’s a signal.
It doesn't mean the market crashes tomorrow.
It doesn't mean you sell everything.
What it means is that the margin of safety in this market is thin.
The risks are real.
Have a wonderful Thursday.
I'll see you tomorrow.
All the best,
Simmy Adelman, Editor-in-Chief
Behind the Markets
Found this helpful? Share it with others.
Written by Simcha Adelman