Editor's Note: This article was originally published on Real Money on Jan. 16. To see Jim Cramer's latest commentary as it's published, sign up for a free trial of Real Money.The days of the radical revaluation of banks is now upon us. The days when we sit there and say "they are awful because of the net interest margins" are being put behind us. The days when we worried about the government every minute are behind us, too. Now it is just time to make money and it is important to recognize that because of the difficulties of the previous era and how hard it is now to run the new gauntlet of regulations, there will only be a handful of companies that can dominate in each space and they will make fortunes. This morning we saw that the traditional investment banking business is alive and well at Goldman Sachs (GS) and JPMorgan Chase (JPM). Goldman dazzled not just in that department. I was truly shocked at how much many was made by equities, fixed income and commodities. Goldman has a return on equity of 15%, much, much higher than people thought. It also had a remarkable decline in compensation costs. The shareholders are getting the incremental gains now, not the people who work at Goldman as the ratio of compensation and benefits to net revenues was 37.9% compared with 42% for 2012. That's shocking. Remember this is a real story now, not a jury-rigged one. These gains are NOT about a hedge fund that's in drag. They are about regular business lines making a huge amount of money. Plus the place is brimming with cash. Tangible book value is now $134 and this company now deserves to sell at a 20% premium to tangible book like the old days. You can see it going to the $160s on this quarter. JPM? What do you say about a company that did $100 billion in revenue and yet cut the compensation of the CEO in half because of the Whale issue, which is now put behind them for good. The whale's back in the Natural History Museum. We don't need to relive the Star Trek save-the-whales movie. Here's what's incredible about JPM's numbers. Almost every single line but one, the net interest margin, was blowaway good.
Cramer: New View on Banks Starts Today
Jan 17, 2013 | 07:00 AM EST
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas