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Coronavirus/Stocks when to buy

Ceiling Cat

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Feb 25, 2009
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Are you going to follow the sheep? It is pure speculation when ( or if ) the travel business will get back to pre covid-19 levels. IMHO, we are going into a WWWW recession for the next 3-4 years, so airlines will hemorrhage money in the short / medium term.
 

bazokajoe

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Nov 6, 2010
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I don't get it. Air Canada stock keeps going up while most of their money making planes are sitting idle. They say they are bleeding cash.I know they raised a bunch of money recently,but just boggles my mind why they keep going up in price.
 

Ceiling Cat

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Feb 25, 2009
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AC stock is pushed up by amateur speculators. They will have to wait 10 years to get their money back, if they can wait that long. Many will sell out AC when they get kicked in the balls and stock prices will be driven down when they dump the stock.

Soon the second quarter GDP report will come out, with the dismal unemployment stats. The second quarter AC report will show the devastation the lock down has done when there is no earnings and only expenses.
 
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moemoron

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Jul 4, 2018
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I would agree with Ceiling Cat.

I have been selling most of all last week. I could be wrong, but this rebound is not backed by numbers yet. It's just speculative that the numbers will go back up. I fully expect the market to fall 15-20% off of these levels within the next two months, but I could be wrong.
I'm fine with sitting on the cash in the meantime. An opportunity missed is better than a failed speculation!

FYI, the 1929 stock market crash also rebounded similarly, and was a WWW bear market for almost 2 years. I don't expect it to be the same degree here, but fully expect a WWWW as mentioned above.
 

nottyboi

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May 14, 2008
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AC stock is pushed up by amateur speculators. They will have to wait 10 years to get their money back, if they can wait that long. Many will sell out AC when they get kicked in the balls and stock prices will be driven down when they dump the stock.

Soon the second quarter GDP report will come out, with the dismal unemployment stats. The second quarter AC report will show the devastation the lock down has done when there is no earnings and only expenses.
Bizzare that people are investing in AC, they are looking at bailing on the Air Transat acquistion and laying of 20K people. Huge amounts of capital parked and burning money, huge 787s being used to fly domestic routes.
 

Ceiling Cat

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Feb 25, 2009
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It is not as easy for an airline to go out and lease a plane, AC wanted to buy Air Transat for their plane leases. This would mean instant availability of planes for AC, as well as putting to work idle planes AC might have if there are vacation charters for Air Transat that they could not handle.

This was all before the covid-19 shut down. The demand for domestic, international and charter flights has been reduced to almost no demand.AC does not need the extra planes now.
 

Allegra Escorts

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Feb 27, 2014
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The market has gotten stupid, and people are suffering from serious FOMO because they have too much time on their hands and no fun things to do with their money. A lot of millenials see this as a generational buying opportunity, and they're looking at businesses at historic lows and expecting them to come back to those levels quickly. They figure they can throw money at businesses that will *eventually* reopen, and if things nosedive again, they can wait for a while to get their money back.

But who the hell thinks it's a good idea to invest in airlines and cruises right now?!? Capital-intensive businesses that struggle to make money during the best of times, with massive depreciating assets sitting idle. The bad news hasn't even hit their balance sheets, and somehow people think they should be buying those businesses now? They assume they'll win out eventually, because they haven't even considered that the business might fold. I bought Marriott a few weeks ago, thinking it would be great if I made 10% profit within a year... then I dumped all of it last week because it's just not sustainable. I cannot for the life of me understand who started buying enough Hertz stock to push it back above $5/share, probably the same people who will throw money at the next airline or cruiseline to file chapter 11. Probably the same people who think bitcoin is a great pension plan.

Granted, it's an asymmetric recession, because not everyone is out of work, and some businesses are actually thriving. The tech stocks are surging because they're benefiting from the shutdown, so I believe that part of the recovery is legit. Plus the 2 trillion that the US government invented has to go somewhere, and there's nowhere else to put it. I think that the financials are probably the closest thing we have to a proper bellweather of the market... choppy recovery, still 30-40% below their peak, but probably not revisiting the lows of March unless there's another oil shock or comparable event. Plus, the banks themselves know the economic situation based on what's happening internally, so they're as likely as anyone else to be out in front of whatever comes next.

I'm an amateur and I find the psychology of the market fascinating, and the shutdown has given me a chance to explore something I wanted to learn more about. I suspect that a lot of other amateur investors like me are doing it for the same reasons, and they'll be the ones who get burnt the worst. I might be, too, but I'm not looking to be greedy at this point; I rode the wave up with Marriott and a couple of other stocks that surged, but I've dumped it all and moved back into tech, healthcare, and banks.
 

Ceiling Cat

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Feb 25, 2009
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There was a small sell off on Wednesday this week where the vast majority of the market sold off. This may be the first indicator that the market is losing confidence. There may be a few more of these sell offs and they will get bigger and more frequent. In the Great Recession of 2007-08 the markets went down for 15 months before it started its recovery.

If Buffett has not bought anything and sitting on the sidelines then I know that is the prudent thing to do. The big hedge funds and institutional buyers are not buying as well. It is too early.
 
But who the hell thinks it's a good idea to invest in airlines and cruises right now?!?
Warren Buffett once said that as an investor, it is wise to be “Fearful when others are greedy and greedy when others are fearful.”

At least in the US market huge profits have been made by investors who "bought on the dip" in March and rode stocks to near all-time highs again last week until there was some minor profit taking.

With just a small investment I bought Air Canada on a dip and am now at a slight profit. I am rooting for them since they had the only non-stop from Phoenix to Toronto, although often at a somewhat higher fare than American with one-stop.

Most US airlines have surged in value since the March swoon. American Airlines is up about 70% in just the last 16 trading days even after the drop last Thursday.

While business and international travel will be slow to rebound there is lots of pent up demand for domestic leisure travel as the shutdown is lifted even if flights can not be packed but enough to be profitable again.

Air Canada is rapidly cutting costs by planning to lay off half of its workforce, expects domestic travel to rebound later this year, has a very strong balance sheet before COVID-19, and raised another $1.6 billion ($575.6m in equity at CDN 16.25 plus $1.02 billion of convertible unsecured notes due in 2025 at 4% interest).

On layoffs:
"We are doing this in order to conserve cash, right-size our business for the level of traffic we anticipate in the mid- to longer-term and to position ourselves to rebuild once business returns," the company said in a statement.

Analyst average 12-month price target is $25.60 per share vs. June 12th price of $19.40 on the TSX. That compares to its 52 week range from $9.26 to $52.71.

It’s going to take time for the recovery story to play out, though. However, even if Air Canada stock doesn’t get back to its previous high in three to five years, there’s still a good chance that it could double investors’ money from current levels and trade at roughly $40 per share is the latest analyst thinking.

While its potential upward flight will no doubt experience turbulence.

Other potentially positive news:

MONTREAL, May 27,?2020 /CNW Telbec/ - Air?Canada's freight division, Air Canada Cargo has announced an exciting new expansion of its cargo-only network with the addition of five new destinations in Europe and South America beginning June 1 .Air Canada Cargo has operated more than 1,200 cargo-only flights since the end of March.

I had travel vouchers from my April canceled trip to Toronto extended from good for just one year to forever and :

MONTREAL, May 22, 2020 /CNW Telbec/ - Air?Canada is offering customers a choice of nearly 100 destinations in Canada, the U.S. and around the world with an abridged schedule this summer. To ensure customers can book with confidence, the airline has implemented the Air Canada CleanCare+ biosecurity program and is introducing new cancellation options retroactive to March 1, 2020, to give customers greater flexibility and choice should their travel plans change for any reason.

Air Canada is the only international network carrier in North America to receive a Four-Star ranking according to independent U.K. research firm Skytrax, which also named Air Canada the 2019 Best Airline in North America.
 

Ceiling Cat

Well-known member
Feb 25, 2009
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Warren Buffett once said that as an investor, it is wise to be “Fearful when others are greedy and greedy when others are fearful.”
Fools rush in where angels fear to tread.

Warren Buffett has sold all his airline and bank stocks. knowing that in the short/medium term the airlines will not make a profit and be saddled with expenses trying to stay afloat. The banks will soon be hit with wave after wave of loan defaults. Small business the survive the next year or two will not be guaranteed to survive in later years. Lean times are a coming. That is not to say that the airlines and banks will never make a profit, but when will that be? Buffett will buy back in when there is a possibility of profit.

March 4, reduced the stock market to 33-40% of its pre covid-19 levels and since then the market been inflated by inexperienced amateur speculators buying stocks from their I-phones on their Robin Hood apps inflating the market to within 5% of it's all time highs. The coming U.S. presidential election may delay the inevitable burst of the bubble by extending stimulus money and enhanced quantitative easing. The true cost of of the pandemic will be told soon and the cracks that were hidden under the surface will be revealed. The bubble that we are experiencing will burst sooner or later.
 

Allegra Escorts

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Feb 27, 2014
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The data seems to indicate the opposite of that narrative, and it looks like Robinhood traders actually got it right:

https://www.cnbc.com/2020/06/15/rob...g-myth-retail-traders-are-the-dumb-money.html

Maybe they were all being greedy because they knew they could afford to wait decades to turn a profit, while a lot of experts like 89-year-old Buffett just aren't as greedy as they used to be?

The general theme seems to be, this recession isn't affecting everyone equally, and the industries that can function remotely (or at a distance) are gaining massively at the expense of those that can't. For those in the former, they're making the same or even more profits than before, and their employees who have money (but nowhere to spend it) are dumping it into the market en masse.
 

snowdon

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Jan 11, 2017
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I'm going huge on COST and WM, they will be the only retailers left, after small business has been gobbled up.
 
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