Plain and simple. The trading loss has been wound down and will not be an issue after posting a solidy profitable Q2 soon. I can guarantee you Jamie has tightening the risk screws on trading, especially by whales. Jamie said the biggest mistake was 'you can't be the market for a synthetic derivative'. Agreed. That is the only reason JPM couldn't escape from this trade without taking large losses. Going forward with its fortress balance sheet and leading market positions, JPM is trading at less than seven times 2013 estimates.
The stock market is very inefficient at times when fear and panic influence sell decisions. The trading loss by the London whale and panicky markets over European fiscal issues have a great deal of fear cast over bank stocks - all of 'em. Best strategy is to always buy the best when they get whacked - and JPM is one of the best. Its ability to quickly recover from the trading mess and tamp down the risk parameters only highlights the strength of this bank. Going forward, we will see record results after posting a solidly profitable second quarter and fully taking and reserving for the trading mess, which is now over 70% wound down (and growing by the day).
At this point in time, the market has a very low valuation for JPM (less than 7 times 2013 estimates). When the panic over the London whale and the European fiscal crisis and regulatory issues fades, we will see times when the market becomes much more optimistic about this bank. The current price reflects a great deal of fear over financial institutions in general, but its best to separate the best from the rest and buy the babies that get thrown out with the bath water.