MrMosby wrote:I guess this is a good time to buy some AXP stock. It took a hit today, but they're still claiming to be on track for their EPS goals.
I have thought about getting some Discover Financial, but I don't directly own shares in any payment network or bank. (I have some through index holdings and shares of Berkshire, which has substantial stakes in Amex, Wells, BofA, and others.)
Partly, I'm nervous about the potential of new companies and technologies that offer convenience to merchants and consumers at a lower cost. If more merchants start charging extra fees to customers who use credit cards, then more consumers might switch. I know that some states have laws that limit what merchants can do in this regard, and that some consumers are willing to pay more for the ability to use a credit card. But the fact remains that Amex's fat fees make it a big target - at least for consumer spending. I'm not so sure about business accounts.
I'm also uneasy about people like me who use the perks and rewards but don't generate a ton of revenue for them. Young people seem more focused on saving money where possible, and have a distrust of big banks. Young people have student loans to pay off, and have seen excessive consumerism make an unsustainable economic mess. I just don't see a lot of new customers getting the high-profit Green and Gold cards as status symbols, especially when they aren't unique and practical cards to the extent they used to be.
Amex's network definitely has value, and there is still some value in the image of the Amex Gold charge card. But I think the company's competitive position is getting weaker, not stronger. The fact that they failed to keep the Costco contract makes me wonder where the company is going. They seem a lot more focused on keeping their short-term margins high than actually retaining consumers.