Comments on: MasterCard Inc. (MA) – Risks to Global Growth

By: TraderMark

TraderMark — Mon, 28 Jan 2008 08:43:38 +0000

Zach, agree with this call for near term. MA is a highly valued stock in a punishing market.

I do have some disagreement on the thesis but we come to the same result (I pared back my holding severely on the 1.5 day “rally”). I do believe the very strapped US consumer is going to be turning to credit cards even more. More transactions = more money for MA. And of course the turn to plastic society overseas. So while you seem to be see just a general pullback in spending (which I can agree with) I think things are so stretched that people will be turning to credit for everyday items: gas, food and I can see people substituting direct withdrawel for things like home heating to credit card method.

With that said, the reality on the ground does not matter.. my main worry is the way stocks have been treated into earnings. Even MSFT could not muster a rally so no matter what MA says or does, I can see people saying “so what, what about the next 6 months? You’re doomed!” etc.

So best to seek shelter for now and let it come in!

By: Justin

Justin — Fri, 25 Jan 2008 20:08:43 +0000

Is it reasonable to speculate that people are either in fear of, or actually running out of cash resulting in them wanting to leverage smaller payments toward credit cards or having to lean on credit cards just to make it through this economic downturn? Also, with the uncontrolled spending during a boom, people might have such high balances that they might continue leave those balances to hold on to cash for other cash only payments (ie. house, car). This would create interest profitability.

By: Zach

Zach — Fri, 25 Jan 2008 19:13:54 +0000

Hey Boris.

I did a piece a while back on EMC and the spinoff – the link is here http://zachstocks.com/2007/09/emc-corp-emc/

I’ll try to review it again in the next week and see if I can come up with more details. For whatever it is worth, I own a small hedged position in VMW

By: Boris

Boris — Fri, 25 Jan 2008 17:18:54 +0000

Zach, would you consider doing a piece on recent ipo V M Ware symbol VMW. some players think this is a big deal. VMW is my request…. but there is also a complex sweetner in that EMC owns 90% of the company and value players are buying the VMW shares for even less by owning EMC. VM Ware has a market capitalization of about $30 Billion and an annual sales block of $2 Billion-ish.