Question: Is MasterCard a goldmine?

Guille Ggh: There is tremendous competition coming to the space displacing and making credit card companies redundant. The more cryptocurrencies and payment fintech companies appear, the more likely it is that credit card companies will see margin compression. Although cryptocurrencies and payment applications aim to compete in the debit card payments/ remittances/ transfers segment, and while credit card companies have a know-how and regulatory advantage as their business model involves a different set of skills (lending and credit risk pricing), the big credit card companies are almost guaranteed to face structurally lower returns. No industry can exeperience the level of new entrants without hurting incumbents profitability. 25x P/E + structural profit decline do not scream goldmine to me.

Kris Feng: Do u invest in crypto?

Kris Feng: What’s master cards profit margins? Isn’t it really high?

Guille Ggh: If you cannot distinguish the difference between current and historical profit margins vs future profit magins (and how the latter are the only relevant ones for stock investors) you should definitely not be invested in the stock market. Go back to studying how to properly value a business.

Kris Feng: Guille Ggh am I wrong? I checked, I thought they make good profits, are u saying they don’t?

Kris Feng: And I am studying, just getting someone to confirm my homework, if it was that easy there be a lot of rich people, also I noticed this is a terrible time for value investing since most companies are fairly overvalued

Guille Ggh: Kris Feng I am saying that MasterCard is super mega profitable NOW – but I would not bet that will be the case in the FUTURE (i.e.: their ROE might easily fall from the current +70% to less than half of that in less than a decade – that would destroy t…See more

Kris Feng: Guille Ggh I am here looking for advise, I have a feeling your here to belittle me and trying to one up me, I only asked a question. I am not making a sales pitch

Guille Ggh: You asked a question in a hyperbolic and immature way (“is mastercard a GOLDMINE”) and against my better judgement I tried to offer some actual advice about how to interpret a complex potential investment idea in a more sober and educated way. It is be…See more

Kris Feng: Guille Ggh are there any sign of me getting offended? Oh so “you” interpreted my question to be hyperbolic and immature…

Guille Ggh: Signs of you getting offended: Feeling that I was trying to belittle and one up you when all I did was offer an answer.

Kris Feng: Guille Ggh well I am not offended, anyways, your answers where legit and good, I do agree with you, and I am still thankful for your advise…. so thanks. No one else seems to be offering me any advise, maybe my question is hyperbolic, but honestly I didn’t meant it that way.

Guille Ggh: Sure thing, I shall also apologise for my harsh tone, which was uncalled for.

Guille Ggh: I strongly suggest that you get Morningstar Equity Research (about $100 per year subscription cost). As far as retail investment research goes, Morningstar does some of the best work out there (half of what they write is crap, but the other half is rea…See more

Kris Feng: Guille Ggh thanks!!!! I’ll look into it, I live in Canada, hopefully morning star will let us Canadians subscribe…. I tried subscribing to Barron’s 1 years ago and it wouldn’t go thru… I don’t know why…. but anyways I’ll look into Morningstar