Sr. Pessimist

American Express Company Q2 2008 Earnings Call Transcript

I love you American Express. Too bad the economy offers no room for us to dance together like I wanted. Things aren't as they have been before in past years (prior to 2004). Startups aren't feasible for a single talented guy to pull off. My failure was a sign of the times. I am a failure, but mostly because of market saturation.

The Fat Lady's Not Singing Yet for the Economy

I think this is only the beginning of the decline in earnings. 2008 will be the first year of the earnings recession. I believe earnings will continue to recede.

American Express to Sell Private Banking Unit Within Weeks -- Reuters

Wealth management is also highly fraudulentized (my word). I know a young guy in San Diego who was telling me of a seminar he went to. There are companies that can con young people with potential like him, and they say something like "a cross between a mutual fund and a money market account." He didn't know the differences well enough to smell something. And they wanted like $15k up front to "manage" for him. He probably has the jingle for one shot like that, but I'm sure he didn't do it, whether or not he took my word for it.

The mentality is just to take whatever money you have and make it work for you. People want to just make 10% risk-free. That's borderline usury. Financial companies used to not be allowed to get away with that. It's unfeasible to expect 10%. My LLC will have that interest on the loans I gave to it, but nobody else is allowed to get 10% interest off my company because I own the whole thing. Unless you have a special deal like that, you'll get 5%, maybe a smidgen more or less, for the early five figures. They get ahold of like $5k and put it aside with dreams of it becoming $5m.

As with this deal, I think American Express perceives another market to explore. I also think that many people can just manage their own wealth without much problem. They just believe that by giving $20k to a professional that it will somehow be managed better than if they just stuck it in a liquid CD or a high-yield money market account and forgot about it until something came up. Then again, there are a lot of differences between those who are successful while highly self-reliant and those who are highly successful without self-reliance.