If someone asked you to estimate the true value of a company without checking stock prices or analyst reports, would you be able to do it? This was the first investment question given to Jamie Dimon, the head of the world’s largest bank, by his father during his childhood.
As the son of a stockbroker, Dimon’s father didn’t teach him how to chase highs and lows in the market. Instead, he urged him to study industries, read annual reports, and calculate how much a company is really worth. This challenging investment game, described by Dimon as “extremely difficult,” not only transformed his investment mindset but also laid the foundation for him to lead JPMorgan Chase, becoming one of the most influential bankers on Wall Street.
Game nights in Western households are usually filled with laughter and entertainment, but for Dimon, what awaited him at the childhood game table was not mere fun, but a meticulously designed investment challenge by his father – a test of thinking that he described as “brutally difficult.”
The 70-year-old Chairman and CEO of JPMorgan Chase recently revealed on “The Master Investor Podcast with Wilfred Frost” that his father once designed an investment game for him to compete in during his childhood. The difficulty level was so high that even the classic board game “Monopoly” paled in comparison, almost making it seem as simple as “Go Fish.”
Dimon said his father would give him a restaurant’s annual report or that of a company in an industry he was familiar with and ask him to analyze it. This process made him realize deeply that investment judgment was not as easy as one might think. He mentioned, “Even if I were to do this exercise again now, I would still find it challenging.”
He reminisced, “He would say to me, ‘Study this company well, look at its past developments, read the annual report. If you want to understand more, you can also study the entire industry. So, what do you think this stock is worth?’ It’s really difficult to almost a brutal extent… You might think the fair value of this company is 13 times the earnings, but the market price could be only 7 times or as high as 25 times. That’s why this practice always makes people realize that their judgment still has limitations.”
Dimon pointed out that his father never forced him and his two brothers to practice investment analysis because they were not interested in investing. However, for Dimon, this childhood training ignited his curiosity and set him on the path of investment. At the age of 14, he bought his first stock.
In an interview with “How Leaders Lead with David Novak” last year, Dimon mentioned that his father was actually more interested in philosophy and didn’t want him to become a stockbroker. He recalled that his parents never forcefully instilled financial knowledge but taught them more important life lessons: choosing something meaningful and purposeful to pursue.
“You can pursue art, science, education, or even become parents. The point is not what you do but doing it well and finding the meaning in it,” Dimon said. “My parents were very insistent on this.”
Experts point out that receiving financial education from a young age helps cultivate children’s independence, self-confidence, decision-making skills, and influences how they approach problems, evaluate risks, and seize opportunities in the future. As financial literacy requires discipline and self-control, the impact of Dimon’s childhood financial education may go beyond just monetary value on paper. Furthermore, his parents’ emphasis on principles laid the foundation for him to pursue a meaningful life.
A study in 2018 indicated that teenagers who receive financial education not only increase their financial knowledge but also improve their “social-emotional traits and behavioral performance,” such as enhancing self-control and fostering better spending habits. Moreover, even if children make mistakes in financial practice, they can learn from them and develop better judgment.
According to research from Cambridge, children start building basic concepts needed for future financial management by the age of 7, including numeracy skills, understanding income, and gradually gaining knowledge about the source of money through learning about their parents’ occupations.
Parents can open bank accounts for their children to start fostering financial awareness through budget management. They can also teach practical money usage through activities like pocket money, assisting in making shopping lists, which help children understand the practical application of money. In addition to playing store games, parents can follow in Dimon’s father’s footsteps by having children analyze company annual reports and contemplate investment choices to help nurture financial thinking.
Canadian banking research suggests that setting savings goals and striving to achieve them helps cultivate children’s “patience, planning skills, and delayed gratification,” essential life skills that will benefit children in the long term regardless of their future careers.
This article was referenced from the financial media Moneywise.