How Does the Economic Meltdown Present the Best Investment of 2009?
Perhaps the greatest investment opportunity of our time lies in the current extraordinary volume of charged-off credit cards. Only about two dozen banks actually issue credit cards and they are the large banks we all know – Chase, Citi, BofA, Wells Fargo, and so on. The smaller banks that “issue” credit cards actually do it through the large banks and the small bank never owns the debt.
But these large banks are generating humongous volumes. Based on information from the Federal Reserve, in 2006, the banking industry pushed about $31 billion of charged-off credit cards into the market. That number had been relatively stable for more than 10 years and should pretty much represent the industry capacity. In 2008, the volume went to $59 billion, a 90% increase in two years. At this point the industry is stretched to the limit and the banks are beginning to saturate the network third party agencies. In 2009, the volume of credit card charge-offs is projected to be $105 billion, a 230% increase in 3 years!
It’s this extraordinary volume that makes the opportunity so large as the existing industry can in no way accommodate this volume. Thus, new investors have the opportunity to acquire loans at very attractive prices. In early 2008, prices for fresh charged-off credit cards would have been 10 to 12 cents on the dollar. Today the price is around 5 cents on the dollar.
So here’s the good news/bad news
The economy is not great. Unemployment is high. Bankruptcies are growing. Recovery will likely be slow. All those factors impact the ability to collect and recover on charged-off assets. Thus, the market price for these assets will continue to decline in response to the recovery challenge. All things being equal, I believe the profit opportunity is as great or greater today than ever.
America is on sale and word is getting out. Don’t be the last one to the party. The may be the very best investment opportunity of our time. Don’t miss it!
Watch the webinar now with expert and Billionnaire entrepreneur Bill Bartmann for more information.
