Jamie Dimon's Medicine to Cure America

Marc Lichtenfeld
by Marc Lichtenfeld, Chief Income Strategist

Jamie Dimon's Medicine to Cure America

by Marc Lichtenfeld, Investment U Senior Analyst

Wednesday, January 11, 2011: Issue #1684

It's difficult to spend time at the J.P. Morgan Healthcare Conference and not feel optimistic.

Sitting in on presentations, talking with brilliant scientists, meeting with CEOs and hearing about incredible developments in medicine and medical technology always gives me the feeling that tremendous progress is being made in the way many diseases are treated.

But none of the doctors had a prescription for what's ailing America and its economy.

However, J.P. Morgan Chase's (NYSE: JPM) CEO, Jamie Dimon, did.

In a stirring one-hour interview with CNBC's Maria Bartiromo during the lunch break, Dimon showed why he's one of the most revered business leaders in America today. With his standard bluntness, Dimon told Maria and the audience of 8,500-plus why things aren't so bad and how they can get better.

Dimon, the unapologetic capitalist, told the audience, "You should feel pretty good about the lives you save. And you should be allowed to make a profit."

He said the United States is in a mild recovery, which is strengthening and is broad based across most sectors. "Companies are in fabulous financial shape," he stated.

The CEO noted the consumer debt ratio is back where it was 20 years ago, and that housing supply and demand are starting to balance out.

He believes housing is near the bottom. "When you see employment going up three, four or five hundred thousand a month, you better buy that house you want because the price won't last," he warned the audience.

But it wasn't all sunshine and rainbows. There's a lot of hard work to do. Dimon's recipe for getting America back on its feet is for executives to stop griping and work hard to build their companies regardless of the economic, geopolitical, or regulatory environments.

In dealing with tough economic times, Dimon suggests every business run a stress test, like banks are required to do. He told the assembled group, many of whom were healthcare executives, to model a worst-case scenario in terms of revenue, cost of goods, etc.

He practically laughed at the notion that businesses should take geopolitical concerns into account. "They are there every day of your life," he said. "Iran doesn't matter because there's always something out there... Always."

In terms of regulatory issues, his approach was two-fold.

One, make sure you're represented in Washington. Allocate resources to ensure that your case is being heard in Washington. "There's nothing wrong with that. It's democracy."

Two, deal with it. Dimon emphasized that he's all for regulation when it's done properly. Usually, it's not. But he has no choice but to figure out the best way to run his business within the rules as they stand. Hopefully, some day they get better. But executives have to keep plugging along and grow their companies whether the rules are strict or not.

He got political as well about various topics:

Occupy Wall Street - "Stop vilifying big business. Things are pretty good, but we can't get out of this malaise (if business continues to be attacked)."

Immigration - "America has the best military and universities in the world. It's pathetic and immoral that we teach kids from all over the world and then make them go home."

Subsidies - "Government should stop subsidizing business. Just get out of the way."

Obamacare - "Would I like to see universal healthcare? Yes. But all we did was pile more stuff on top of a crappy system."

Payroll tax – "The payroll policy is in effect for two months! What kind of a joke is that?!"

He snapped at an audience member who questioned Wall Street's short-term focus on quarterly results. "Sometimes the market will overvalue your company. Sometimes it will undervalue it. Get over it. Run your company and build your business for the long term."

Thoughts From the Conference

This year, more than 8,500 people are attending the conference. That's the most in the six years I've been here. Chatter in the hallway indicates there's money to invest looking for a home in the healthcare space.

Canaan Partners, a Menlo Park, California-based venture capital fund, raised $600 million that will be invested in technology and healthcare companies.

Many presentations are standing room only. If you didn't get to Dendreon's (Nasdaq: DNDN) 10 minutes early, you were probably standing in the hall.

Of the presentations I've seen so far, Vertex Pharmaceuticals (Nasdaq: VRTX) was the most interesting. Rather than crowing about hepatitis C drug Incivek having the strongest product launch in biotech history, the CEO spent much of his time on the company's pipeline, including Kalydeco. The FDA makes its decision on the cystic fibrosis drug on April 18. This would be the first drug for CF that addresses the cause of the disease, not just a symptom.

However, it's only designed to treat a small minority of CF patients that have a specific genetic defect.

The conference is still going on. I've got a ton of presentations to still sit through and several sit downs with CEOs. I'll have lots more next week after I've had time to go over all of my notes. Stay tuned.

Good Investing,

Marc Lichtenfeld

P.S. Here's a one-on-one interview that Dimon did with Maria Bartiromo for CNBC. It's not the same one-hour interview that Marc talks about above, but Dimon touches on some of the same issues:

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