A lot of people are upset that the current political-economic system is geared toward benefiting the wealthy, and they may be right in their complaints. But rather than whine about it, you’re better off trying to figure out how you can benefit from this situation. The rich are getting richer, and that probably isn’t going to change anytime soon, but you can invest in the companies that will benefit as the rich get richer.
There are several companies out there that cater to the wealthy. One advantage to investing in these companies is that they generally don’t have to compete on price. They have developed market niches for themselves by creating quality, desirable products. This is a huge advantage over investing in companies that market to the poor, who often shop based on price. These companies often have razor-thin profit margins, and therefore a small misstep or miscalculation can lead to losses. The three companies I list below are all growing their businesses and their margins, making them compelling investment ideas.
1. American Express (NYSE:AXP)
American Express is a credit card company that markets to the affluent, and as a result, an American Express card is often a symbol of financial success and wealth. The stock has just come off of an all-time high, as profits have been steadily rising as the rich spend more on their American Express cards. The great thing about American Express is that not only are the rich spending more, but they, like the rest of the world, are spending more using credit cards, which are far more convenient than cash. Thus, American Express is positioned to improve its sales at a greater rate than the rate at which the rich are spending, and this is a good position to be in.
Investors who are interested in the stock should keep in mind that it is never a good idea to invest in a company whose stock is trading at or near an all-time high. Investors should therefore wait for a pullback, although be forewarned that such a pullback will only come on the back of some negative news, making it psychologically more difficult to buy.