Airline Industry

  • 30 Aug
    Air Travel Is Booming – Here’s The Best Way To Invest In The Trend (And No… It’s Not Airlines)

    Air Travel Is Booming – Here’s The Best Way To Invest In The Trend (And No… It’s Not Airlines)

    • It’s interesting how global economic activity is shifting more and more toward the east.
    • Air traffic is expected to continue to grow at more than 6% per year. However, this doesn’t mean that any related investment will do well.
    • Good investments will be those with limited or no competition. Think airports.

    Introduction

    When investing, you want to be exposed to growing trends not declining ones. Not that investing success can’t be found in declining industries, but focusing on growth sectors simply increases your chances for a positive return and lowers the possibility of a negative return. Thus, increasing your expected return and lowering your risk.

    One such almost certain long-term trend is the growth of the global airline industry. More →

  • 16 Jan
    Gruesome Industries For Trading, Not Investing

    Gruesome Industries For Trading, Not Investing

    • Even if the industry has wonderful growth numbers, profitability might remain out of reach.
    • We’ll define and describe the industries long term investors should avoid.

    Introduction

    Most of you are familiar with Warren Buffet’s comment on the airline industry in his 2007 letter to shareholders:

    “The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.”

    Now, most connect the above statement only to the airline industry. However, in a deflationary environment where our youngsters expect lots of things for free—think WhatsApp—and extremely low interest rates, there will be more industries where shareholder wealth creation will be difficult to achieve.

    In today’s article, we’ll define and analyze some of these industries. More →

  • 05 Jul
    You Fly the Friendly Skies, But Should You Invest in Airlines?

    You Fly the Friendly Skies, But Should You Invest in Airlines?

    • Airline valuations are incredibly low but the risks are also high, especially if a recession arrives.
    • Demand fell by 20% and stocks fell by more than 90% in 2009.
    • The global long term outlook is very positive with demand expected to double in the next 15 years.

    Introduction 

    In his 2007 letter to shareholders Warren Buffett stated that airlines are the worst sort of business because they require significant capital to engender growth and earn little or no money. He continues that creating a durable advantage has been elusive since the days of the Wright Brothers and even concludes that “if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.” More →