We recently compiled a list titled Starter Stock Portfolio: 10 Safe Stocks To Invest In Now. In this article, we are going to take a look at where JPMorgan Chase & Co. (NYSE:JPM) stands against the other safe stocks to invest in.
The Market Outlook for the Rest of 2024
A probable rate cut has provided hope for the economy. Despite that, the impact on financial markets and stocks remains uncertain. On September 4, Adam Parker, Trivariate Research founder and CEO, appeared in an interview on CNBC. Parker was not surprised that tech stocks were down by close to 4% at the beginning of September, that too right before an impending rate cut. Parker highlights that the inconsistency in the market at the moment is not normal, and with multiple rate cuts over the next two years, he has no reason to hold a positive economic outlook. He suggests that eight probable rate cuts indicate that the economy is slowing, consumer spending is declining, and unemployment is rising, all of which are not good signs for the market. The interviewer counter questions that eight rate cuts with a 25 basis point reduction are not as disastrous to presume a faltering economy. Parker then highlights that rate cuts in the past have been supported by consistent data, an incremental fiscal, and an expansion of the balance sheet, all of which are currently out of the picture. You can also read our piece on the best battery stocks to buy according to short sellers.
The Possible Impact of Rate Cuts on Stocks
On September 2, CNBC published a detailed report on the impact of rate cuts on the stock market in the United States. The Fed, in the footsteps of countries in Europe and Asia, recently announced an easing cycle, after a long period of high interest rates. As per current pricing data, the Fed is expected to have three 25-basis point cuts by the end of this year. Speaking of the global economic outlook, 2025 will see a lower-rate environment followed by easing inflationary pressures. However, the fear of recession in the United States tells another story. Analysts believe that the last four months of 2024 will be considerably weak and choppy amid geopolitical factors, uncertainty from the AI sector, corporate earnings, and most importantly, an overdue consolidation correction.
On September 3, JP Morgan reported that investors must not expect the cutting cycle to provide a fresh start to stocks. Leading strategists at the firm suggested that the rate cut cycle is rather reactive and is in response to a wilting economy, having little to no impact on stocks. Paul Christopher, head of global investment strategy, on the other hand, suggested that the market environment today resembles the market in 1995, increasing hopes for a market upside amid stable GDP strength and forecasts.
Bear market or bull market, certain stocks deserve a place in every investor’s portfolio. These are long-term opportunities to hold and will continue to provide superior returns, as they have for decades.
Our Methodology
To come up with the 10 safe stocks to invest in now, we looked for well-established companies in the energy, finance, healthcare, technology, and fast-moving consumer goods (FMCG) industries. These stocks have a history of performing well and boasting consistent financial results, making them ideal and safe long term investments for beginners. We then picked the top 10 stocks that were the most widely held by money managers and ranked them in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A group of business people discussing plans around a boardroom table adorned with a financial services company logo.
JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 111
JPMorgan Chase & Co. (NYSE:JPM) is one of the safest stocks to buy. The multinational finance company is headquartered in the United States, serving millions of customers in over 100 countries and territories. The company provides investment banking solutions, risk management services, and capital-raising services to companies, institutions, and the government. JPMorgan Chase & Co. (NYSE:JPM) runs several subsidiaries including Chase Bank, Global Shares, Nutmeg, WePay, and Chase Paymentech, to name a few.
As of March 31, JPMorgan Chase & Co. (NYSE:JPM) has $4.1 trillion in assets and $3.6 trillion in assets in management, making it the largest bank in the United States, ahead of its competitors including Bank of America and Wells Fargo. During the first three months of 2024, the company raised $655 in total credit and capital for consumers, small businesses, government entities, and nonprofit entities.
Financial results aside, the company understands the dire need to integrate technology for operational efficiency. Earlier in August, JPMorgan Chase & Co. (NYSE:JPM) launched a generative AI assistant that helps over 60,000 employees complete tedious tasks such as drafting emails and reporting. On the customer front, the company introduced in-store pay-by-face biometric payment solutions for merchants in the US. Additionally, earlier in May, the company launched a new data-managed service for institutional investors allowing them to streamline their operating models for consistent data.
JPMorgan Chase & Co.’s (NYSE:JPM) strong customer base is a testament to its financial performance, which is also its economic moat. Overall, JPM was held by 111 hedge funds in the second quarter of 2024, with total stakes worth $6.98 billion. Fisher Asset Management is the top shareholder of the company with a position worth $2.58 billion.
Carillon Tower Advisers’s Carillon Eagle Growth & Income Fund stated the following regarding JPMorgan Chase & Co. (NYSE:JPM) in its first quarter 2024 investor letter:
“JPMorgan Chase & Co. (NYSE:JPM) contributed positively to performance following solid financial results and positive guidance for the remainder of 2024. Moreover, growing chatter around rising capital markets activity likely contributed to the stock’s strong performance relative to other banks. Recall that JPMorgan has a robust capital markets franchise.”
Overall JPM ranks 9th among the safe stocks to invest in. While we acknowledge the potential of JPM as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than JPM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published on Insider Monkey.