American Express: A Berkshire Enigma

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The portfolio of Berkshire Hathaway, a construct vast as any ancient library, contains multitudes. Within its holdings, one name persists, a recurring decimal in the calculus of value: American Express. Not merely a financial instrument, but a cipher, a key to understanding the Oracle’s enduring fascination with the ephemeral currents of commerce. As of late winter, its ascent over the past five years – a gain of 180%, compounded by dividends to reach 198% – suggests a trajectory less of simple growth, and more of an unfolding paradox.

It is tempting to view this preference as a straightforward calculation of return. Yet, to do so would be to miss the subtle geometry at play. For years, Apple occupied the apex of Berkshire’s pyramid of holdings. But the gradual diminution of that position – a shedding of shares like leaves in autumn – has revealed a new prominence for American Express. The conglomerate’s stake, now encompassing 16.5% of the portfolio, expands not through accretion, but through the elegant subtraction of shares by the company itself – a peculiar form of self-augmentation.

The Cartography of Desire

To understand the Oracle’s attraction to American Express is to confront the enduring human desire for symbols of status. The cards themselves are not merely plastic rectangles; they are talismans, keys to a realm of privilege. The annual fees, often substantial, are not obstacles, but thresholds – a form of voluntary taxation levied upon those who seek admission to an exclusive circle. This is a business built not on necessity, but on aspiration – a landscape charted by desires as old as civilization itself.

The company’s history reveals a consistent willingness to raise these fees – a testament to its pricing power. From 2020 to 2025, the average fee increased by 75%, a rate that would make even the most ambitious alchemist envious. Simultaneously, delinquency rates remain remarkably low – a statistical anomaly suggesting a clientele as disciplined as any monastic order.

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But the true engine of growth lies in the expansion of the cashless realm. As the world increasingly abandons the weight and inconvenience of physical currency, American Express stands poised to capture a greater share of the resulting flow. Revenue, adjusted for the subtle distortions of interest, has climbed by 120% over the past decade. Earnings per share have risen by an even more astonishing 205% – a testament to the power of compounding, and the enduring allure of the credit card.

The leadership team, ever pragmatic, has set ambitious goals – a 10% increase in top-line revenue, and a mid-teens surge in earnings. Whether these targets will be achieved remains to be seen. The future, after all, is a labyrinth, and even the most astute navigator can lose their way.

The Price of Admission

The stock’s recent ascent has resulted in a valuation that appears, to the uninitiated, somewhat elevated. The price-to-earnings ratio currently stands at 23.3 – a multiple that has expanded by 124% over the past decade. A prudent investor, one familiar with the cyclical nature of markets, might therefore wait for a more favorable entry point. To rush in now would be to risk becoming a participant in a speculative bubble – a momentary illusion of wealth, destined to dissipate like smoke.

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2026-02-13 16:32