If you’re looking to invest in the finance sector, you might want to pay close attention to the credit-card industry. If the investing instinct of one of the history’s most successful investors ever, Warren Buffett, is correct, now is the right time to load up on Visa and MasterCard, Inc. These are the companies behind the vast majority of credit cards in use today.
Just judging by Warren Buffett’s investment activities through his public filing for Berkshire Hathaway (NYSE:BRK.A), this veteran investor is loading up on credit card stocks. He is scooping up huge volumes of Visa (NYSE:V) and MasterCard (NYSE:MA) stocks. In addition to these credit-card companies, he is also the owner of close to 15% of American Express’ (NYSE:AXP) total shares. This amounts to around $12 billion at current value.
Why is Buffett putting down serious money into credit cards? Actually, the answer is quite simple: Credit cards are the power behind digital payments. Unless Bitcoin just completely goes crazy and dominates the global payment processing space, the game is still centered on Visa and MasterCard. As digital payment continues to evolve, the primary reference point for online payments still boils down to good old-fashioned credit cards. Whenever credit cards are involved, the same three players are well-positioned: Visa, MasterCard, and American Express.
To put it in fancy terms, Warren Buffett’s focus on credit cards is actually his indirect way of supporting technology in general. As technology changes the way that people use their mobile devices to interact with commercial opportunities, credit cards provide the financing firepower in the back office to make things happen. By scooping up these credit cards, Warren Buffett is actually playing the technology market the smart way. He’s not investing in Facebook or any other tech company that’s in the forefront. Instead, he’s buying up companies that supply the processing power at the back-end. Again, no surprise, this man is one of the world’s richest men. He is an investing genius.