Today, we’re going to talk about an exciting theme that you’ll find in the Plumb Funds portfolios. It’s the digitization of how we buy things.
It’s how we pay, not what we buy
Thomas G. Plumb, CFA
President, Wisconsin Capital Management
Portfolio Manager, Plumb Funds
Years ago, I worked in Sheboygan, Wisconsin, and I was told by people that the reason why the local people had such loyalty to a company called the Prange Company
was because Mr. Prange accepted eggs for workpants. Barter.
We’ve come a long way from barter. We use cash; we use checks, and, now, we use credit cards.
So who’s benefitting from that?
Who is benefitting?
To us, this is exciting.
A few years ago, a company called Alibaba in China, they invented a holiday called Singles Day. November 11th in China they had about $25 billion of transactions.
Singles Day 2017
80% executed with mobile devices
Eighty percent of those transactions were done with mobile devices. This is a country that historically was an all cash just 20 years ago. So for us, that’s an exciting change.
So, in the United States, you can start to see people using their mobile devices to pay for things. You have software that ties your bank. You can transfer cash between each other. Now, who’s making this happen? PayPal, Apple Pay, Google Pay, Samsung Pay, almost every one of those is backed up by your credit card. So, at the Plumb Funds, we believe that Visa is a major beneficiary of the fact that people are changing how they buy things.
If you and I go into a store and physically look at a clerk, we tend to use our Visa card about 14 percent of the transactions; but if you buy online, you tend to use your Visa card on 42 percent of those transactions.
14% in stores
Source: Visa 6/22/2017
Digital transactions are the wave of the future. We see that change as going throughout the whole world. We believe that this trend, this secular change, still has a long way to run. When we look at the Plumb Funds, and how we’re going to invest and benefit from that, we think that we should invest in the companies that are enabling this digitization of financial transactions between consumers and businesses.
Opinions expressed are those of the speaker as of April 2018 and are subject to change, are not intended to be a forecast of future events, a guarantee of future results, nor investment advice.
Fund holdings are subject to change at any time and are not recommendations to buy or sell any security.