After I recently discussed a college friend that is currently focusing on making large share purchases in the four major credit card companies each month, a reader asked me why I wouldn’t do that considering my awareness of the superior returns generated by credit companies. In short, I think there is a tendency to underestimate the technology disruption that can exist in the payment industry.
Generally speaking, there are two types of companies that make good candidates for investment. One is companies with specific products—Nestle chocolate bars, Colgate toothbrushes, Procter & Gamble’s Gillette razors immediately come to mind. People desire those things specifically, pay money to acquire them, and shareholders tend to grow wealthy with each passing decade. The other category, of course, refers to companies that act as hosts to facilitate people getting to the product they want. Wal-Mart is the classic example of this. No one goes specifically … Read the rest of this article!