Why I'm buying VISA

Two things on my mind considering Visa:
1. I'm not well educated on this industry but I'm under the assumption that profit margins are shrinking.. this can't be good news when your new customers earn &200 per month.
2. How does Chinese government intervention in the business sector threaten foreign financial companies, if at all?

China as an emerging market is the place to watch -- nothing new there. Carefully watching the goods and services the Chinese favor is the name of the game. Sort of like the old joke about selling just one pair of shoe laces to every person in China. You just have to make sure they're not all wearing loafers....

The Global economy will always increase. Visa puts purchasing power into the hands of the Global economy. This is a stock that I hold and am looking at it for long term gains. It very well could be a cornerstone of any portfolio. Put this one at the back of your portfolio and let it ride.

As the economy heads down to a possible recession, you might see that the consumption of individuals will suffer, as well as Visa profits.

I think that the stock is a long term buy, but I will wait until the speculation around the price of the stock dissipates, and it become easier to calculate a fair value.

Bulls Say:

-Visa benefits from a change in the way consumers and businesses pay for their purchases. As long as consumers and businesses continue to pay more with cards and less with cash and checks, Visa will benefit.

-Visa isn't exposed to credit risk because lending to cardholders isn't part of its business model. As a result, the deteriorating consumer credit environment has little effect on Visa.

-Visa's network is hard to build or duplicate. The company connects thousands of financial institutions, and its network is used daily by millions of cardholders and merchants. This creates substantial barriers to entry for potential competitors.

-Visa is a leading brand in the global payments industry; more than 60% of the outstanding cards in the world carry the Visa logo. The settlement with Amex, which was achieved shortly prior to the IPO, removes a substantial legal liability overhang for new shareholders.

Bears Say:
-Visa is a constant target of regulators throughout the world, and attacks on the firm's business model are unlikely to stop after the IPO.

-The exclusion of Visa Europe from the IPO undermines the firm's ability to negotiate agreements with large global bank clients such as HSBC.

-American Express has been stealing share from Visa in its biggest market, the United States. We expect this to continue now that Amex is allowed to issue its cards through banks that were previously exclusive to MasterCard and Visa.

-If the interchange fees charged to merchants decrease substantially, banks that issue Visa will probably put even greater pressure on the firm to reduce the amount of processing fees and assessments it charges, leading to lower revenue.

-In many of its international markets, Visa benefits from only cross-border transactions while intracountry transactions are processed through rival processing networks. As a result, Visa doesn't benefit from the bulk of the growth in foreign markets.

I admit I'm in a dilemma.. Visa fits my portfolio as far as I feel it's time to get back into some financial stocks. I understand that Visa can go deep on 3rd world countries and as Nicolas suggested have no doubt that people will use more and more plastic over cash.
I also agree with Nicolas that the ridiculous spike in price after the IPO smells fishy.. I don't want to wait 2 years to see profits.
My 3rd question is aren't there sweeter deal in the industry? Wouldn't I be wiser buying JP Morgan (JPM), more Etrade (ETFC), Citigroup? (C) - these guys have published reports and written off all their sub prime loses and then some.. Won't JP morgan grow faster than Visa over the next 5 years, riding on the same economic growth?
It's all a question of alternatives, and Visa doesn't give me any real reason to buy now, don't you think sitting on the fence and buying big banks makes more sense these days.

Visa- like Mastercard MA- Visa is only a processor. THey are not involved in extending credit to anyone. THey just collect the money and process the transactions. There is no credit risk here.

MA is undoubtedly the Queen of these cards but VISA is certainly the Prince. I have Visa and will keep it as long as it keeps going
up.

To guiliamo's post. I for one wouldn't touch Citibank,Etrade or JPM with a ten foot pole. You don't know how much more debt there
is. You don't know what else they will be writing off. YOu don't know what size of loans that they have to take.

C has paid the Saudi's 11% for a loan. They just sold securities for 8% return (preferreds). I wouldn't touch them.

The only financial I would buy is GS.

V is a financial but in a very different sense. As i said they don't extend credit. They are a processor.They don't act like a bank.

You can get into financials when the picture becomes a little more clear in months to come. You might miss a couple of points on the upside. Personally, I would like to see a more favorable
economic condition and see that the banks are making money before I would put one nickel into those stocks.

Citibank has laid off 20,000 people this quarter. In NY atleast
they have closed alot of the branches and have scaled down the size of many of their other banks. The less to pay for their real estate.

Does that look like a rosy picture? I ask you.

Thanks for that advice, verushka, and I don't necessarily disagree.. Etrade and XLF are my only financial holdings. I am looking at JPM though.. they didn't get into the sub prime hassle in the first place and bought bear sterns for next to nothing.. although the results of this deal will prove sweet without a doubt, I'll take your advice and just keep following. What do you think will be the point when things will look clearer, these guys have already reported.. will you wait for Q2 results?

i made a lil on V a few times after the IPO, etc. BUT i have expected a lil more from it recently. it's taken a lil hit on the 'new' no signing of names under $25 amount thing. i think they get squeezed outta some $ there.
SO i think that's where some volatility and weakness in stock price if currently coming from.
that said, i'm still in a good amount... i was (sorta) happy when the price dropped & bought more at $74.
it's hit $89 before & a low of @ $67 (where it doesn't stay long!). AND it's BIG w/the Olympics (china) even tho i'm not.
overall, i still think it's a good price right now.