This basically sums up my current investment thesis - credit cards are the next mortgages. Think about it this way - the average household has $2,000 in credit card debt that they carry over from month to month. These are the same people that are defaulting on their mortgages left and right. The thing is though, credit cards have much more lenient terms, allowing people to put off payments again and again. They are also unsecured. If you don’t pay your mortgage, at least the bank gets your house. If you don’t pay the credit card, the lender has no recourse. So the strategy is - short Visa (V), Mastercard (MA) and Discover (DFS). Going to leave AMEX alone, as their lending policies are stricter. Thoughts? Are there better ways to short credit card debt than shorting the individual credit card companies’ stock?
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This basically sums up my current investment thesis - credit cards are the next mortgages. Think about it this way - the average household has $2,000 in credit card debt that they carry over from month to month. These are the same people that are defaulting on their mortgages left and right. The thing is though, credit cards have much more lenient terms, allowing people to put off payments again and again. They are also unsecured. If you don’t pay your mortgage, at least the bank gets your house. If you don’t pay the credit card, the lender has no recourse.

So the strategy is - short Visa (V), Mastercard (MA) and Discover (DFS). Going to leave AMEX alone, as their lending policies are stricter.

Thoughts? Are there better ways to short credit card debt than shorting the individual credit card companies’ stock?

Source: southpol

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