Should I Buy Airline Stocks?
I’ve deliberately avoided buying airline stocks for years, but I wonder if I am just leaving money on the table…
Is It Time To Jump Back Into Airline Stocks?
Richard Branson once said, “If you want to be a millionaire, start with a billion dollars and launch a new airline.” I’ve long avoided dabbling in airline stocks, a cyclical and volatile industry with low profit margins, but I’m reconsidering that long-held reluctance.
Some background first. 15 years ago or so, I bought United Airlines stock, held onto for about six months, and sold it for a tidy profit. In 2011, I bought American Airlines stock and lost my shirt when it declared bankruptcy. And I was doubly foolish because had I just held it instead of selling it for pennies on the dollar, I would have made a very tidy profit since AA ended up not canceling existing stock during its reorganization.
That has been the extent of my investment in airline stock…
Last Monday, I told my wife that I was thinking about buying some United stock ahead of the release of its earnings report. I had no insider info, but I figured United would beat profit expectations and we could make a little money, even if we just day-traded it.
I got busy and forgot about it, but I was correct and United did beat profit expectations. In fact, UAL jumped 15% and continues to climb. It’s up again today and some analysts are betting the stock will rise to $80/share.
I also had an inkling to buy Spirit Airlines on Friday, which is up 61% so far today. I figured it would get a reprieve on its financing, which of course would have resulted in a tidy payoff today. And I do study the airline industry closely and so my knowledge about these companies is far more informed than other companies I might invest in.
But I do hesitate. There’s not just a “hunch” or basis of knowledge behind such an investment, but also emotion, which strikes me as a dangerous investment metric (short of, perhaps, buying a house). I also don’t want to go Tim Dunn on you and start pushing the airlines I invest in because I have a pecuniary motive.
Maybe the simplest thing is just to keep my “retirement” money in the fund that I have it in…that fund is stable, tends to grow, and I guess most importantly I don’t really think about it. I fear that trading stocks more actively is a time-drain and becomes addictive behavior, which I would want to avoid.
Bottom line: I am considering it, have not done anything yet, and would welcome your thoughts…I do love the varied opinions of the Live And Let’s Fly community.