4 Investing Takeaways From The Fed’s Stress Test Results: JPMorgan Chase & Co. (JPM), Bank of America Corp (BAC)

The test results also provided some indication that some banks are quickly going back to “business as usual.” Goldman Sachs, specifically, was projected to have a worse than median impact on net income in the worst case scenario, and was one of the overall worst performers measured by the impact to tier 1 capital. The tests also revealed a potentially large outlier loss exposure in commercial and industrial lending.

This could be interpreted two different ways. First, that the “smartest guys on the Street” have an edge on the market, see a stronger than expected turnaround, and are poised to capitalize on it; or they have returned to the pre-crisis status quo of risk-taking with reckless abandon in search of returns. Either way, Goldman is currently trading near 2 year highs, their P/E ratio is settling in around 11 after being as high as 25 in the last 12 months, and their ROE is nothing spectacular at 10.8%. This is a stock worth watching, but not worth an investment.

After the Financial Crisis, these stress tests should be viewed as a positive for the investment community and the public at large. It provides new insights into exceedingly complex operations and the financial conditions of the nation’s largest banks. Ultimately this will protect our system of finance and help the investing community make more informed decisions with their money. Keep a copy of the results by your bed for sleepless nights; you may wake up with a new perspective on your bank.

The article 4 Investing Takeaways From The Fed’s Stress Test Results originally appeared on Fool.com and is written by Jay Jenkins.

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