On Friday, the S&P 500 was down 0.9% and Toronto was down 1.4%. Accordingly, most of our stocks were down. Melcor was down 6% which is probably explained by its extremely low trading liquidity. It’s certainly not a stock for short-term trading.
Some interesting news today…
Microsoft buying Linked in for $26 billion. That seems like a huge price to pay. The company apparently makes losses rather than profit. I have been registered with Linked In for years and found very little to almost no value in it save one in a while using it to message a business acquaintance. The transaction shows that there is a continued appetite for companies to buy other companies and to pay a high price. That is supportive for stock prices.
Wal-Mart Canada to stop accepting Visa cards. That is big news. For many years VISA and MasterCard have been getting high fees from retailers. As transactions became 100% electronic the costs faced by the card issuers came down but fees did not. In fact fees went up as card companies issued reward cards with higher fees. Most retailers were powerless and had no real choice but to accept the cards and pay the fees. This may be a turning point in getting card companies to lower fees.
In Canada, the fees paid on debit cards have been ultra low. But the credit card companies have issued debit cards with higher fees outside the interact network.
I have always said that Visa and MasterCard were basically monopolies (duopoly for the consumer but monopoly for the retailers who had no real choice really but to accept both). Historically monopolies need to be regulated as to price but credit card companies were largely unregulated. Hence they made outrageous profits. Accordingly, they have been fantastic investments but did face the risk of increased regulation. The credit card industry is ripe for change.