Why Investing in American Express Remains a Great Long Term Strategy

Amex

Choosing the right stocks is much easier said than done. However, there is plenty of interest in the matter, which in turn, means that interested individuals can expect no shortage of recommendations for what stocks they should and shouldn’t be investing in. For an excellent example, consider the case of American Express, which received a nod from various sources in late 2018 and early 2019.

Why Should You Consider Investing in American Express?

Essentially, the recommendations were made on the basis that American Express is doing well and can be expected to continue doing well. For proof, consider the fact that the company managed to make a record-breaking profit of $6.9 billion in 2018, which is the kind of performance that inspires confidence in interested individuals. With that said, people who are now eyeing American Express might want to take some other facts into consideration.

First, one of the reasons that American Express managed to perform so well in 2018 can be attributed to the fact that the global economy was so strong in said year. This is supported by the fact that both Visa and Mastercard saw excellent numbers as well over the same period of time, which suggests that the three companies were propped up to some extent by a rising tide. Unfortunately, the experts haven’t been particularly optimistic about the global economy in 2019 because of a number of concerning signs, meaning that this factor might not be there for either American Express or its competitors in the current year.

Second, it should be mentioned that American Express is different from its competitors in one very important way. In short, American Express and its competitors earn revenue by being payment processors, but American Express has branched out much further by offering a wider range of financial products and services to interested individuals. For example, American Express is famous for its credit cards. Likewise, American Express offers loans and other products and services as well. As such, it is important to take these operations into consideration whenever people want to evaluate the company as a potential investment.

Unfortunately, this is much easier said than done because these operations can be both positive and not so positive depending on the circumstances. For example, these operations can prove very profitable in economic boom times, thus adding more value to American Express stock. However, if the global economy should stumble, it shouldn’t be difficult to see why a lot of investors might be more hesitant to take a chance on American Express.

However, there are some reasons that American Express might not be as impacted by an economic downturn as one would expect. First, American Express’s financial products and services tend to be offered to existing members of its customer base, who are more affluent than general consumers. As such, the company is less susceptible to economic downturns because the rich are more capable of absorbing higher costs and reduced incomes. Second, American Express has been managing to expand its operations at a steady pace by not just marketing its financial products and services but also by increasing its range of financial products and services. Something that should put it on a better footing to weather economic shocks when combined with its preference for focusing on consumers who are less vulnerable to such occurrences.

Further Considerations

Based on these factors, it seems reasonable to say that there is a chance that American Express will continue doing well in 2019 in spite of legitimate concerns about what is coming over the horizon in economic terms. However, interested individuals should never just take the recommendations of other people when it comes to choosing investments. Instead, they should look over the investments on their own to see whether their characteristics are suitable for their own investing needs and preferences, meaning that checking out such recommendations should be nothing more than just the start of the process. In this as in other financial matters, thorough research is critical for getting a better chance of getting the desired outcome.



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