Buffett’s Dashedly Clever Bet: A $1K Stake in American Express 🎩

One might imagine Mr. Warren Buffett, that paragon of prudent pecuniary planning, perched in his Omaha drawing room with a cup of Earl Grey and a cigar, muttering, “Jeeves, I think we’ve stumbled upon a most satisfactory investment!” Alas, the great man may soon hand over the reins to Greg Abel, but the essence of Berkshire Hathaway’s portfolio remains as steadfast as a penguin in a snowstorm. Among its treasures lies American Express, a stock that has occupied 15.9% of the portfolio since the 1960s—when Buffett first began amassing shares through his partnership, a sprightly 7% annual saunter from 1964 to today. One might say he’s been rather fond of the card.

Behold! The AmEx card, a veritable deus ex machina in the world of finance, operates not merely as a plastic rectangle but as an exquisitely selective dining club for the well-heeled. Unlike those vulgar imitators Visa and Mastercard, who fling their cards at any Tom, Dick, or Harry with a pulse, AmEx insists on a clientele so refined they could probably spell “economically” without batting an eyelid. This exclusivity, one might argue, is a masterstroke of Jeeves-like cunning, for it ensures a clientele less prone to default and more inclined to dine at Michelin-starred establishments. And indeed, the delinquency rate? A mere 0.8%—a figure so low it makes a penguin’s waddle look efficient.

Now, let us not pretend this is a stock for the faint of heart or the economically challenged. AmEx’s dual role as both issuer and bank means it dances a delicate quadrille with inflation and interest rates. When rates rise, one might imagine Visa and Mastercard shivering in their boots, but AmEx, ever the composed host, simply adjusts the volume on its net interest income. It’s a most elegant balancing act, really—a bit like juggling flaming torches while wearing a monocle.

And what of growth? From 2014 to 2024, AmEx’s revenue (net of interest) and EPS have grown at a CAGR of 7% and 10%, respectively, while buying back a third of its shares. One might call it a “sprightly” performance, especially considering the global economy’s penchant for chaos—pandemics, geopolitical tiffs, the usual suspects. Looking ahead, analysts predict further growth, driven by affluent customers’ insatiable appetite for travel and the sort of premium perks that make one feel like a Bond villain with a sense of style.

But here’s the kicker, my dear reader: at 20 times next year’s earnings, AmEx is a veritable bargain compared to its rivals’ 28 and 35. One might say it’s the financial equivalent of finding a first-class train ticket in a second-hand bookshop. It won’t make you rich overnight, but it will ensure you arrive at your destination with your dignity intact—and perhaps a few extra bob for a spot of tea.

So, if you’re inclined to invest $1,000, why not follow Mr. Buffett’s lead and let AmEx work its magic? After all, as the great man himself once said, “You can’t create another American Express”—and if that isn’t a recommendation worth heeding, I’m at a loss to imagine what is. 🎩

2025-07-28 11:02

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