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American Express: False Sense of Security?

What an ‘excellent’ evaluation of AXP! With comments like ‘…they are lending more money during a time when they are seeing a higher level of delinquencies…’ or ‘…BEFORE you answer that, whatever you do, don’t tell me that the worst has been priced already…’. (LOL)

Obviously the author is able to (or expects to be able to) catch the bottom, or time the market. Has it ever occurred to him that when it becomes obvious to the street that the financial crisis and the economic downturn are behind us, AXP’s stock would have already shot up 50%. If the economy was firing on all cylinders, you would very likely have to pay at least 25 times earnings for AXP. The only time you can pick up one of the highest quality businesses in the world at 13 times depressed earnings, IS during a severe downturn.

What determines the true value of a business is the stream of its future earnings discounted at an appropriate rate of return, not the day to day or month to month stock price action. And if you can take advantage of a downturn to purchase a quality business at a huge discount to its intrinsic value then you’ll be handsomely rewarded, regardless of whether ‘the worst is priced in’ or not.

I can’t believe this guy has written a book on investing!!!

By the way, the famous value investors at Tweedy Browne, used the recent downturn to add to their AXP holding: www.dataroma.com/m/hol...

A Rare Opportunity To Buy AmEx On The Cheap

Agreed, never thought I'd see AXP at p/e of 13. I unfortunately bought to early a few weeks ago. They have huge exposure to the fast growing economies of the world. I will add to my position here. So many great value inestors own it:

www.dataroma.com/m/sto...

No doubt they will use this opportunity to add to their positions.