Two purchases were made today. Both were tough to pull the trigger on. I’m personally feeling bearish right now, but I have to limit my emotions and follow the systems that I’ve set in place. First, the cash signal, which has been in effect since October 19th, has finally cleared. This means we put 40% of the portfolio back into the ETF Momentum system. And for that, Russia leads the way. So we bought RSX (Market Vector Russia Index fund). We are truly playing ‘Follow the Leader’ with this pick, as the Russian stock market is already up over 100% in the last year.
Second, a company named Total System Solutions (TSS) has fallen into our buy zone. TSS provides payment processing services to financial and nonfinancial institutions. The company’s services include processing consumer, retail, commercial, and government services, as well as stored value and debit cards. It is a well run, financially strong company based in Columbus, Georgia. So why am I worried? TSS has been the beneficiary of the decades-long expansion of U.S. consumer credit. And that’s the problem. Consumer credit is contracting for the first time in generations. Families have reached the limits on their credit cards, and E-Z home equity loans are no longer. Less credit card transactions mean less revenue for TSS. However, the market has already discounted a lot of this information with TSS. And TSS is growing internationally, so as consumers around the world begin using credit and debit cards, TSS can take a slice of the pie. I calculate that TSS is worth at least what I paid for it, even if revenues remain flat from here. Further, I believe TSS is a great buyout candidate.