Investing in Airlines

mhcasey

Well-Known Member
What do you guys think? Not sure I'd mess with United or USAir, but the others seem to actually be in decent shape. Assuming our entire economy doesn't collapse, I think some of the majors will turn things around. I don't see the credit crunch hurting anyone since most won't be buying new planes for a while. I expect the oil bubble to completely burst in the not too distant future (it seems people have finally figured out there is not that high of a demand).

Any other investment ideas right now?
 

ppragman

FLIPY FLAPS!
What do you guys think? Not sure I'd mess with United or USAir, but the others seem to actually be in decent shape. Assuming our entire economy doesn't collapse, I think some of the majors will turn things around. I don't see the credit crunch hurting anyone since most won't be buying new planes for a while. I expect the oil bubble to completely burst in the not too distant future (it seems people have finally figured out there is not that high of a demand).

Any other investment ideas right now?
I wouldn't mind some LUV (southwest) stock, its held on pretty well throuout all of this, infact if you look at the airline stocks, they haven't gone totally tits up right now, most of them have declined, but few I could see on google finance fell at the same rate as the market. Aviation, it appears, is about 6 months behind the rest of the market. In 6 months, all of these companies are going to be in trouble, and its going to happen almost overnight, UAL will be on its back, so will many of the others. I think once the market starts to rebound in about a few weeks airline stock would probably be good for a short term investment. As for not investing in your college or university or the like in favor of the market, I'd say bad juju. You can only make as much money as you're educated. Now would be the time to get as much debt as possible in student loans, because the dollar will probably hyperinflate and then you'll owe "less." We can hope at least.
 

Ralgha

Well-Known Member
Pilots will almost always tell you to avoid airline stocks. Total crap. They tend to be more volatile than some other industries, but if you do your research there's nothing wrong with it. Don't just dive in without doing some research on them first though. Figure out what moves the stock, and ignore the pilots. I'll probably get flamed for that, but it's true.
 

BCTAv8r

Well-Known Member
Bought AMR as my first stock ever.

Bought at $9.00.
Oil rose. Stock plummeted to $4.00.
People told me to sell and cut losses. Ignored said people (maybe foolishly as these were people that know more about the market than I)
Oil drops a bit plus AMR furloughs more employees.
Stock goes up and is sold at $13.00.
 

USMCmech

Well-Known Member
I would stay away from buying individual company stocks altogether.

Pay a bunch of experts who live sleep and breathe this stuff to do this stuff for you, and in the long run you'll have much better results. In other words buy into mutual funds with a 10-20 year track record of matching or beating the Dow average for that period of time. Don't ever invest money you plan on useing within the next five years, and leave it alone no matter what happens.

Put it this way, if Joe Sixpack wants to fly to MCO to visit Disney world, does he buy a Cessna, read the maunall and fly himself? No, he pays a large group of profesionalls to take care of the thousands of details for him. That group of professionalls has a phenomonal safety record, MUCH better than the part time guys who dabbel in aviation and routinely come to grief.

Same thing with investing, mutual funds are staffed by experts in all the field of investing. You would have to spend 10 years to even aproach the mountains of expertise that these companies have. If you buy and sell on your own, you are just like a PPL who just got thier lisecnse. Except that the sotck market is 1000X more complex than flying.

If you want to "fly yourself" in the stock market keep it small change so you can't lose much money. Stick with the 152, and don't buy a VLJ. Managing you own retirement protfolio will not end well.



If you do buy individual stocks, I would never park money in an airline. Even SWA stock isn't reall great. While it has been stable and not tanked, neither has it grown very quickly.
 

tonyw

Well-Known Member
Let me ask you a question.

Do you think you're a better investor than Warren Buffett?

Because if you intend to make money in airline stocks, you'll have to be.

Even he couldn't do it.

I tell you what. Give me half the money that you want to put into airline stocks and I'll kick you in the nads hard.

It'll hurt just as much and it'll only cost you half as much.
 

ppragman

FLIPY FLAPS!
I would stay away from buying individual company stocks altogether.

Pay a bunch of experts who live sleep and breathe this stuff to do this stuff for you, and in the long run you'll have much better results. In other words buy into mutual funds with a 10-20 year track record of matching or beating the Dow average for that period of time. Don't ever invest money you plan on useing within the next five years, and leave it alone no matter what happens.

Put it this way, if Joe Sixpack wants to fly to MCO to visit Disney world, does he buy a Cessna, read the maunall and fly himself? No, he pays a large group of profesionalls to take care of the thousands of details for him. That group of professionalls has a phenomonal safety record, MUCH better than the part time guys who dabbel in aviation and routinely come to grief.

Same thing with investing, mutual funds are staffed by experts in all the field of investing. You would have to spend 10 years to even aproach the mountains of expertise that these companies have. If you buy and sell on your own, you are just like a PPL who just got thier lisecnse. Except that the sotck market is 1000X more complex than flying.

If you want to "fly yourself" in the stock market keep it small change so you can't lose much money. Stick with the 152, and don't buy a VLJ. Managing you own retirement protfolio will not end well.



If you do buy individual stocks, I would never park money in an airline. Even SWA stock isn't reall great. While it has been stable and not tanked, neither has it grown very quickly.

I disagree with a lot of this, the real truth is that nobody knows what's going to happen in the market. How many people's retirements are in the ####ter now because they didn't think for themselves. I'm not saying if you've got $10000 invest it in UAL, I'm saying that if you are conservative, and diversify, whether you're a broker or a nobody, you'll probably do alright.

Did anyone here have their retirements partially invested in Lehman Bros, or Ford or the myriad of others that went Tango Uniform this week? I bet so, and most of those were probably brokered deals. The real dirty truth is that nobody knows anything at all about what will happen tomorrow.
 

mhcasey

Well-Known Member
Haha alright guys. I was thinking short term only...I think AMR won't sit at $8.00 forever, but hey I could be wrong.

I taught Buffett everything he knows ;)

Is anyone on this board seeing this crapshoot as an opportunity and taking some risks, or does everyone have their money in index funds crossing their fingers?
 

Milesar

Well-Known Member
Its funny that it seems to be such a bad idea to invest money in this industry, but investing your career is ok.

A couple of us were talking of this a few months ago after a similar discussion.
 

NickH

Uber Driver
I'd agree with the mutual fund, but add that fact that index-linked tracker funds generally do better than managed funds.
 

Patrick

Well-Known Member
Its funny that it seems to be such a bad idea to invest money in this industry, but investing your career is ok.

A couple of us were talking of this a few months ago after a similar discussion.
Very interesting observation. What was the outcome of your discussion?
 

juxtapilot

Snowflake
Airlines make for good short term investing practice. There is a pattern. I have seen CAL bottom out three times, and it always goes back up to around 30/share.

If I had money when it was 6 dollars a share a few years ago, I could have made good money when the Delta/Airways thing was going on, and it rose to 45 or 50 dollars. Ah hindsight.

And this...

Same thing with investing, mutual funds are staffed by experts in all the field of investing. You would have to spend 10 years to even aproach the mountains of expertise that these companies have. If you buy and sell on your own, you are just like a PPL who just got thier lisecnse. Except that the sotck market is 1000X more complex than flying.

If you want to "fly yourself" in the stock market keep it small change so you can't lose much money. Stick with the 152, and don't buy a VLJ. Managing you own retirement protfolio will not end well.
Investing in airlines is "Just for fun." The airline world is too weird unstable for long term investments.
 

SlumTodd_Millionaire

Evil Landlord Capitalist
I invest in my own airline (AirTran), but that's only because I constantly pay attention to what's going on with our business plan, what are current hedges are, new routes, etc... I can't keep up with other airlines to the same degree, so I don't bother. In order to make any money in airline investing, you absolutely have to be intimately familiar with what's going on with the company. Just looking at the basic fundaments won't work like it does with most companies. There are just too many variables.

I never invested in PCL stock because I was a union rep, and I didn't want to have to worry about legal issues if I made a bunch of money and someone wanted to allege that I did it on "inside" information. If you're in a management or union leadership position, I would strongly advise staying away from trading in your own company's stock. The upper-level executives have attorneys that can keep them out of trouble by advising them of when it's safe to buy or sell shares without fear of insider-trading accusations, but most middle-managers and union reps don't have the same luxury. It isn't worth the risk.
 

Alchemy

Well-Known Member
I think I read somewhere that airlines have shown combined quarterly losses 4 times greater than combined quarterly profits since deregulation. That alone should tell you this isn't an industry you want to invest in. If you do the key would be not to get greedy, as soon as you make any kind of reasonable gain, bail out.

Shorting airline stocks is probaby a marginally better idea! I'd rather play poker and at least have fun while I lose my money though.
 

flyinguitar

Well-Known Member
I strongly recommend not taking investment advice from public internet forums. I read A Random Walk Down Wall Street by Burton Malkiel and decided to invest in index funds at Vanguard following their recommendations for asset allocation. I think Warren Buffett is brilliant (obviously); while he hasn't written a book, he's got tons of quotes and sayings floating around that are wonderful nuggets of wisdom about investing. He comes from the value investing school of thought; his mentor, Benjamin Graham, wrote two widely-read books: Security Analysis and The Intelligent Investor.

I understand that my first sentence presents a logical absurdity whereby if you do take my advice, then you will be inherently going against my advice. Hmmm....
 

wheelsup

Well-Known Member
According to Mr. Malkiel stocks are always priced at their value. They never go on sale. Oh wait no after saying that for decades he finally changed his tune. I'm not sure I would listen to a word he says.

FWIW Buffett also says index funds are the way to go for normal investors.
 
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