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....
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.
Malkiel's book is great for old guys planning a retirement. I'm 23, and if I lost my entire net worth tomorrow I could have it back in a few months. Hence my desire to take a few risks because there are definitely "stocks on sale" right now.
However, I think Malkiel was simply saying that it takes a high degree of luck to find the stocks that are truly on sale - A degree of luck that either tends to balance out over time or is extremely profitable if you're Warren Buffet. He bases most of this on comparing mutual funds and saying that the individual investor probably does not have the means of extending profits to cover brokerage costs and still come out ahead of index funds.
Every dollar you invest in your 20s is like 100 invested in your 40s. Put 10% of your income in an good set of mutual funds and you'll have a few million when you're 60.
When Mesa stock took a nosedive after Delta announced it was cancelling the ERJ contract it went down to about 0.45 -- I bought about 1000 shares because I thought it was a temporary correction. Stock went back up to about a dollar a week or so later and I sold.
How are you measuring "decent shape?" An investment's real value is it's ability to generate future cash flows. Using that as a lens, I don't think too many airlines appear to be "good" investments right now. Airlines investments have a tendency to deteriorate very rapidly and unexpectedly, especially under challenging economic conditions.
Airlines (and other business) don't only borrow money to acquire assets. It's very common for businesses to borrow money for operating capital. This is the problem that I believe airlines will face very soon. I suspect their credit lines are drying up.
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).
I don't think demand was overstated to begin with. My take: the dropping price of oil reflects a current and/or anticipated drop in world demand, as predicated by economic indicators.
As for good investment advice.... I suppose that depends on your goals. If you're trying to accumulate long-term wealth, I doubt buying airlines will accomplish that.
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