The subtitle of this book says “How the middle class joined the money class”, which describes exactly what this book is about.
The book covers the period between the early sixties and late eighties, a time were many financial products for “ordinary” citizens were invented and today are used by almost anyone.
Executive summary: Although American Express looks cheap based on their historic profitability, the company is subject to rapid technological change and fierce competition in the payment industry. To me it is not clear how this will work out going forward, so for the time being I will not invest but look deeper into the industry.
American Express is well known in value investment circles because Buffett owns ~15% of the company and made a lot of money with it.
Recently the stock price came under pressure mainly because:
- they lost a big co-branding contract (Costco) which will materialize in 2016
- EPS shrank for the first time since 2001
- lost a court case (vendors steering clients to cheaper cards)
- “fintech hype”: mobile payment & peer-to-peer lkoan platforms as disruptors
The stock price clearly has suffered and is down more than -40% from its peak in late 2014 /early 2015: