Just One Word

Mr. McGuire: I want to say one word to you. Just one word:
Benjamin: Yes, sir.
Mr. McGuire: Are you listening?
Benjamin: Yes, I am.
Mr. McGuire: Plastics!
Benjamin: Exactly how do you mean?
Mr. McGuire: There's a great future in plastics. Think about it. Will you think about it?
-The Graduate

The line about plastics in the movie, The Graduate, referred to the hard stuff that houses your cell phone, and to the phony characters being portrayed. The script was correct about the hard stuff, but also, the flimsy stuff that more and more people around the world carry in their wallets, purses, or even their tube socks while playing a pickup game of basketball.

Driving both forms of plastic - some would say, the superficial one as well is rapid global prosperity. I've been mocked for my investment thesis that begins with the foundation of global peace. It's followed by global prosperity, as more people around the world embrace free markets and step -up to the challenge of succeeding in a system that handsomely rewards risk, effort, and determination. The great news has the lead and capital to benefit from expanding global wealth. But, that advantage is fading quickly, as others want the machinery of wealth that comes from our know-how-to tools.

Charge It!

Yesterday shares of MasterCard (MA) enjoyed a standout session after announcing a 10-for-one stock split and other (real) shareholder rewards. The media was fixated on the split, but I was fixated on the 83% increase in dividend payout to $1.10 from $0.60, and the $3.5 billion to repurchase company shares.

There are two ways of rewarding shareholders...higher dividends and buybacks, that take the stock off the market, making existing shares more valuable (supply and demand 101). I guess management was so giddy, they tossed in a third reward by splitting the stock; making it more attractive to individual investors.

The real story of yesterday's news, however, is the global economy. The by-product of wealth is credit or, is the by-product of credit wealth? Credit and debit cards are more than symbols of wealth; they facilitate the flow of capital that is the engine of prosperity. So, to answer Mr. McGuire's question..."yes" the world was listening... and yes, they love plastic in any language:

Plastique
Kunststoff
Plastico
Ano ba Ang
Plastic

Credit card volume without US $439 billion +15.9%, US $151 billion +7.2%
Debit card volume without US $290 billion +21.9%, US $164 billion +11.6%

The global recession derailed the surging economic tide, just as growing pangs will from time to time, but make no mistake; the world is eating up the notion of global prosperity and self-improvement through free markets as quickly as the west is abandoning the idea.

When it comes to prosperity and the rest of the planet- we borrow one more line from The Graduate, and the answer is "yes"...

"...You're trying to seduce me."