Echo To All

Still Substantial Risk in Credit Card Investments

I understand your thesis, but your not quantifying the 'paper-to-electronic' payment change. We all know consumer spending will be down, and the market is not giving MA or V a free pass. They are currently trading at with a 2009 PE of 14-15. So I ask... if a PE of 14-15 too much of a premium for MA, that has beat (sorry... crushed) earnings expectations quarter after quarter.

They are able to do this because the social change of paper-to-electronic payment is extremely difficult to quantify.

I'm not saying MA is going to the moon, I'm just saying ur thesis needs to account for the social change. And your not doing this.

As for the charts, they are holding up very well. Get worried when MA breaks the 120 level. That is when the charts will indicate a fundamental issue not yet revealed.

Credit Card Defaults Are Just Beginning

simmer down on the credit card defaults... everyone keeps mentioning it, but credit card debt is known to be expremely risky and defaults see a big increase during times of economic downturns.

in other words, there will be no surprises with respect to risk here... this type of debt is far better understood by the banks.

Credit Cards: The Next Subprime?

come on Grace... everyone working on the street knows debt from credit cards are higher risk, and understand that risk far better than they did subprime debt. Meaning, they will be taking these delinquencies into account.

not that I even have to spell it out for you (as i am sure u already know), but the difference between credit card debt and subprime debt is that a grossly incorrect assumption to risk was placed on subprime.

investors know very well in times of economic slowdown credit cards delinquencies go up. (especially when the consumer is squeezed with a higher cost of basic goods.)

so no... its not the next subprime, its just the normal increase in delinquencies from an economic slow down. Pending how severe the slow down and real inflation (not gov. reported inflation) stays high, prudent assumptions should be the delinquency rate goes higher.