Buffett’s Stocks: A Skeptic’s Case for Visa and Amex

Warren Buffett’s impending departure as Berkshire Hathaway’s CEO marks the end of an era. Yet the market, ever a creature of habit, still clings to the notion that his choices-Visa and American Express-hold some inherent virtue. Let us examine these stocks not as relics of genius but as products of a system that rewards complacency as much as insight.

Berkshire Hathaway’s success under Buffett was as much a product of his era as it was of his acumen. The same cannot be said for the current climate, where economic tides shift with the whims of central banks and consumer confidence. Still, the myth endures. For those who believe Buffett’s picks are infallible, the recent performance of Visa and American Express offers both vindication and warning.

1. Visa: The Illusion of Growth

Visa, the largest credit card network, boasts $16 trillion in payment volume. Yet this figure, like a mirage in the desert, reflects the scale of a system built on perpetual motion. Consumer spending, its lifeblood, is as fickle as it is necessary. In its latest quarter, Visa reported a 14% revenue increase, a figure that sounds impressive until one considers the shrinking pie of discretionary spending.

The company’s foray into artificial intelligence and stablecoins is less innovation than survival instinct. Its “Visa Intelligent Commerce” initiative, allowing purchases via AI agents, is a desperate attempt to future-proof a business model rooted in the past. The stock’s recent dip, following earnings reports that failed to raise full-year guidance, hints at a market growing weary of incremental progress.

Visa’s resilience is not a virtue but a necessity. In a world where cash is obsolete and contactless payments the norm, standing still is a luxury it cannot afford. The stock’s outperformance against the S&P 500 this year may tempt investors, but history teaches us that momentum is a fickle friend.

2. American Express: The Closed-Loop Mirage

American Express’s closed-loop model-a self-contained ecosystem of banking, credit, and rewards-appears elegant until one peels back the layers. By funding its own credit cards, Amex sidesteps the volatility of third-party institutions but creates a different kind of fragility. Its reliance on affluent, high-spending clients is both a strength and a vulnerability.

The company’s net interest income, bolstered by high rates, may seem like a hedge against economic downturns. Yet this income represents only 23% of total revenue, a precarious balancing act. Annual fees, the lifeblood of Amex’s recurring revenue, are a double-edged sword. They attract a loyal base but exclude the masses, leaving the company dependent on a shrinking demographic.

Amex’s growth in Gen Z spending, up 40%, is a statistical anomaly as much as a triumph. Younger consumers, lured by rewards and prestige, may be fickle allies in a market where brand loyalty is fleeting. The company’s addition of 3.1 million cards in the second quarter-a “typical” figure-speaks to a stagnation masked by selective metrics.

For long-term investors, Amex’s trailing-12-month revenue-almost double Visa’s-may seem compelling. But such figures obscure the reality: Amex’s growth is not a result of mass adoption but of extracting more from fewer customers. A world where spending power is concentrated is not a promise of stability but a warning.

Buffett’s endorsement of these stocks is less a testament to their quality than to the enduring power of his myth. In a market starved of certainty, his name is a talisman. Yet the future belongs not to the legends but to the adaptors. Those who invest in Visa and Amex do so not because they are infallible but because the alternatives are scarier. ⚖️

2025-08-06 17:19

1. Visa: The Illusion of Growth

2. American Express: The Closed-Loop Mirage

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