Investing in airlines during the corona crisis?

[SoWhat]

I made a tidy sum with PanAm, until I didn't.

 

[cardude01]

Never mind. I’m putting it in the too hard pile. [emoji30]

 

[FF]

Airports make money from gate space .

 

[DBrunes]

What happens if you invest in AA and they go bust. Loose all?
Is there a stock that represents a collection of airlines and support business's?
An investment in the whole industry seems a better bet to me.

JETS etf. I haven’t done any research yet but worth a look.

 

[Blissboat]

Speaking of bottom fishing, how long will it take for the cruise industry to get right-side up again? It's not just a few scuffed-up brands. The entire sector is damaged, psychically and financially. Every operator's fleet is way over capacity and unsalable. The only intermediate term play I can see would be to lease vessels out as quarantine wards, which would do little to fix public perception of cruise ships.

Time to swoop in and buy?

 

[Tiffany]

Aah, Baker. I hope your financial knowledge is far, far, far better than your knowledge of pandemics and the potential of the coronavirus - especially with regard to how the situation in the US has been bungled. Let's see where it is in two weeks.

 

[Tiffany]

Statistically, 60% of the US population has a chronic health condition that will compromise their survival rate above their respective age group. That will increase the overall mortality rates. Additionally, as being seen already both discretionary and non-emergency surgeries are being postponed in order to conserve as much medical capacity as possible. If the infection growth curve grows quickly, as seen in Italy, the system will exceed capacity. The US has 4,500 ICU beds, while a 30% infection rate across the country would see a requirement for 200,000 ICU spaces.

 

[BandB]

The US has 4,500 ICU beds, while a 30% infection rate across the country would see a requirement for 200,000 ICU spaces.

First, a 30% infection rate is not expected based on events so far. Second, the majority of infections do not lead to a need for ICU.

Still, we're short of ICU spaces, but our shortage of equipment like ventilators is a far more serious challenge, as is our shortage of testing, and our potential shortage of medical personnel. More ICU or disease quarantine can be effectively achieved if hospitals are reacting now. They need to start reducing the number of elective procedures and elective admissions and continue as they start to see more need for Covid 19 patients. They should anticipate the virus need and also illness among their staffs.

 

[Tiffany]

Sorry, but I had assumed that any ICU would require a ventilator as an essential element of being termed an ICU. It's hard to actually say that a 30% infection rate is expected as there has been so little control or testing done to date. While the majority of infections do not require the use of an ICU/ventilator, if we were to take 30% of the US population, ie 103.5 million infections, as requiring ICU care, 200,000 ICUs represent only .002% requiring full ICUs, but at 4,500 units presently that is only .02 of the requirement.


Okay so even if 10% of the total population becomes infected - a more than reasonable prospect - that represents 34.5 million X .002 =69,000 ICUs and current availability of only 4,500. This is a recipe for battlefield triage of a level being seen in Spain and Italy.


https://www.lrb.co.uk/podcasts-and-videos/podcasts/lrb-conversations/wash-your-hands-again?referrer=

 

[O C Diver]

Okay so even if 10% of the total population becomes infected - a more than reasonable prospect - that represents 34.5 million X .002 =69,000 ICUs and current availability of only 4,500. This is a recipe for battlefield triage of a level being seen in Spain and Italy.


https://www.lrb.co.uk/podcasts-and-videos/podcasts/lrb-conversations/wash-your-hands-again?referrer=

Your numbers don't reflect the flattening of the curve and duration of time in an ICU. Don't know what the average duration of time in the ICU is, nor the time component in the top half of the curve, but it's nothing like 69,000 trying to occupy 4,500 spots.

Ted

 

[Tiffany]

Ted / O C Diver,

You are absolutely correct, my number don't reflect the unknown of the growth curve and the critical flattening required to maintain capacity of the system. At the same time, Italy, with ~12,500 confirmed infections with 16 million in the northern-most populated portion of the country, is already reeling in its ability to care for critical cases. That is .00078 % of 1/4 of the total Italian population.

Here is a good piece from today's WaPo that fully describes the deceptive nature of a pandemic, "When a danger is growing exponentially, everything looks fine until it doesn't."

https://www.washingtonpost.com/opin...m=email&utm_source=newsletter&wpisrc=nl_ideas

 

[O C Diver]

Ted / O C Diver,

You are absolutely correct, my number don't reflect the unknown of the growth curve and the critical flattening required to maintain capacity of the system. At the same time, Italy, with ~12,500 confirmed infections with 16 million in the northern-most populated portion of the country, is already reeling in its ability to care for critical cases. That is .00078 % of 1/4 of the total Italian population.

Here is a good piece from today's WaPo that fully describes the deceptive nature of a pandemic, "When a danger is growing exponentially, everything looks fine until it doesn't."

https://www.washingtonpost.com/opin...m=email&utm_source=newsletter&wpisrc=nl_ideas

The WaPo article isn't helpful as Italy didn't have time to do the preperation to flatten the curve peak. And the Lily pond syndrome assumes a static profile. Which this clearly isn't. If you substantially reduce the interaction of the most vulnerable (who will need the ICU) with the most likely infected / carriers, the numbers will be decidedly different.

One only has to look at China's history with the disease to see that there is some excessive fear mongering in the USA. After the disease started, you had a dramatic spreading effect with people traveling for the Chinese New Year. To fit the WaPo article template death totals should be in the hundreds of thousands to millions. Why hasn't it happened?

Ted

 

[Woodland Hills]

The WaPo article isn't helpful as Italy did have time to do the preperation to flatten the curve peak. And the Lily pond syndrome assumes a static profile. Which this clearly isn't. If you substantially reduce the interaction of the most vulnerable with the most likely infected / carriers, the numbers will be decidedly different.

One only has to look at China's history with the disease to see that there is some excessive fear mongering in the USA. After the disease started, you had a dramatic spreading effect with people traveling for the Chinese New Year. To fit the WaPo article template death totals should be in the hundreds of thousands to millions. Why hasn't it happened?

Ted

It could be because we are in the part of the curve where it looks like nothing is happening. Check back in two weeks, hopefully you are right and I’ll be wrong.

 

[Tiffany]

Ted,
Yes, you are correct that China's growth curve has flattened, as has Signapore's and South Korea. That is due to the severe measures employed to curb mobility and meetings/social distancing. The WaPo article doesn't deny engaging measures, nor does it advocate doing nothing; it simply illustrates the problem latent in pandemics, which is that what looks like nothing can explode virtually overnight into a runaway.

My comments began relative to remarks from 'Baker' at the opening of this chain that Covid 19 was nothing more than on scale with the flu. Such notions are dangerously wrong, albeit appealing in their off-handedness. As of this morning, Washington's 40 deaths out of 642 confirmed equates to >6%. Is that 'fear mongering"?

 

[O C Diver]

Ted,
Yes, you are correct that China's growth curve has flattened, as has Signapore's and South Korea. That is due to the severe measures employed to curb mobility and meetings/social distancing. The WaPo article doesn't deny engaging measures, nor does it advocate doing nothing; it simply illustrates the problem latent in pandemics, which is that what looks like nothing can explode virtually overnight into a runaway.

My comments began relative to remarks from 'Baker' at the opening of this chain that Covid 19 was nothing more than on scale with the flu. Such notions are dangerously wrong, albeit appealing in their off-handedness. As of this morning, Washington's 40 deaths out of 642 confirmed equates to >6%. Is that 'fear mongering"?

I agree that this is serious, although not the plague. With regard to the Washington numbers, the sample size is to small and the congregation of so many deaths in one facility makes the numbers an anomaly, not scientific analysis. Washington and California will again see a huge spike as the large populations of homeless become infected. The problem currently is that we don't know how many are infected that either don't require medical attention or aren't (and maybe won't) show symptoms. If we found out that 1 million had the disease and 40 had died, I doubt this would make the evening news.

Best to take precautions, but extremely important to not scare people into irrational behavior. This won't be the last pandemic. If you expect the average citizen to take them seriously, certain parts of the media can't keep pushing "Millions will die".

Ted

 

[Jeff F]

Your numbers don't reflect the flattening of the curve and duration of time in an ICU. Don't know what the average duration of time in the ICU is, nor the time component in the top half of the curve, but it's nothing like 69,000 trying to occupy 4,500 spots.

Ted

Experts have a pretty good idea of duration of time in ICU. And curves.

As far as flattening the curve, we all play a part. And most of us continue to act in ways that are steepening the curve rather than flattening it.

 

[O C Diver]

Experts have a pretty good idea of duration of time in ICU. And curves.

As far as flattening the curve, we all play a part. And most of us continue to act in ways that are steepening the curve rather than flattening it.

What is the projected average time in the ICU?

Don't completely agree with you on the curve part. It is my impression that the most at risk for ending up in the ICU are doing much better at social distancing (staying home or avoiding peak populations times) at least in the land of snow birds (SWFL). I will agree with you that the under 50 crowd sees this as the flu and a major inconvenience.

Ted

 

[Tiffany]

“Don’t believe the numbers when you see, even on our Johns Hopkins website, that 1,600 Americans have the virus,” Dr. Marty Makary, a medical professor at Johns Hopkins University told the outlet. “No, that means 1,600 got the test, tested positive. There are probably 25 to 50 people who have the virus for every one person who is confirmed.”


https://mavenroundtable.io/theintel...s-have-the-coronavirus-eBud51i5u0-MiVjemVsktg

 

[BandB]

“Don’t believe the numbers when you see, even on our Johns Hopkins website, that 1,600 Americans have the virus,” Dr. Marty Makary, a medical professor at Johns Hopkins University told the outlet. “No, that means 1,600 got the test, tested positive. There are probably 25 to 50 people who have the virus for every one person who is confirmed.”


https://mavenroundtable.io/theintel...s-have-the-coronavirus-eBud51i5u0-MiVjemVsktg

In FL, 14% of those tested have been positive. Since we know many are positive with no symptoms in other countries, that would indicate a likelihood of a very significant percentage of our population positive and growing rapidly. People are going to doctors sick and testing negative for flu, negative for strep, but being refused any testing for Covid 19.

 

[Jan Wright]

Ha! Yes. However the airline industry has consolidated so much over the past few years I guess it’s a little less of a bad bet. Think that’s why Buffett started buying again after he swore he would never buy another airline stock.

I would consider a Sector fund covering the transport industry, or leisure industry.
This way you cover a larger spectrum of companies.

 

[BruceK]

One of our entrepreneurs, Gerry Harvey, aged 80, majority shareholder in Harvey Norman which is a household goods retailer franchise umbrella system, bought some shares. Only to have the market fall again. He reminded himself of the old adage " Never try to catch a falling knife".
Many airlines will go bankrupt with this. I hope Qantas does not. I have more hopes for it than its competitor Virgin Australia, which I suspect is in trouble, along with its shareholder airlines.

 

[Insequent]

I think we're at the point where the thread title should be corrected.

Better to ask 'investing in Corona during the airline crisis'.

But can't bring myself to do that either!

 

[BruceK]

My cellar looks good and Treasury Wine Estates is still delivering, now without requiring a signature. Their shares tanked, but not because of CV.
Qantas shares are still well above their post GFC lows.But we`ve not reached a bottom yet, and today`s market may be just a "dead cat bounce".
Going to see if I can buy some food someone has not already hoarded.

 

[FF]

Boeing is on my to buy list , as is Exon. At the bottom of course.

 

[Woodland Hills]

I sold everything and am now in FDIC insured accounts. I gave back all the gains of the past 12 months and am happy it was no worse.

 

[AlaskaProf]

I think we're at the point where the thread title should be corrected.

Better to ask 'investing in Corona during the airline crisis'.

But can't bring myself to do that either!

Control towers at LAS, MDW, ORL closed.

Talked to a guy who arrived here in Puerto Vallarta on the flight we normally take. 20 pax on a 737-900.

 

[O C Diver]

Lots of good buying opportunities. With the roller coaster ride ups and downs, limit orders and market opening panic selloffs, you can get some amazing buys. If your investment strategy is buy at the bottom and hold long term, this opportunity is available only a few times in your life.

Ted

 

[Woodland Hills]

Lots of good buying opportunities. With the roller coaster ride ups and downs, limit orders and market opening panic selloffs, you can get some amazing buys. If your investment strategy is buy at the bottom and hold long term, this opportunity is available only a few times in your life.

Ted

Are we at the bottom yet? It’s hard to see how another 6 to 8 weeks of a shut down economy would not have downward pressure on the markets. We have not even seen any financial institutions fail yet due to business failures and uncollectable loans.

 

[BandB]

I don't think we're close to the bottom yet. The predicted 20% unemployment doesn't come close to what will be the real rate of jobless when you count the small businessman and you count those being paid and not working. I think the market can and will drop much further.

I continue to look at 10 year periods as I learned long ago. While the market is below it's levels of 3 years ago and approaching 5 years ago, it's still well ahead of 10 years ago. Dow Jones is down 1.6% annual average over three years, but still up an annual average of 1.9% for five years, so still better than CD's over that time.

It changes hourly but $10,000 invested in DJIA five years ago is at $11,077 today and $10,000 in S&P 500 is now at $11,448. Now, I think it may drop 20% more. I believe this will be the greatest decline since the Depression.

On February 27, 2009, the DJIA was $7062.93. On Nov 4, 2016, it was $17,978.75. Today it is around $20,000. It was over $29,000 at one time. My prediction is $14-15,000, which would still be double where it was the last low point.

The stock market is the least of my worries. We have all the potential attributes of a recession and perhaps depression to face. And, lest we not forget, even the recovery may be rocky with runaway inflation and the need for wage and price controls such as Nixon implemented.

The challenge and the ultimate judgment of our society, US and World will be outside the stock markets and outside the numbers. Will our society come together or split? Will the wealthy and fortunate step up to help those less so? It will be a test, not of our economics, but of our humanity. Will we exchange help and ideas among countries, even those that are political or trading enemies? Will we come to the aid of all our fellow man?

Honestly, we haven't done so well in looking after each other in a period of strong economies. Perhaps we'll do better in a period in which we're greatly challenged.

 

[O C Diver]

Are we at the bottom yet? It’s hard to see how another 6 to 8 weeks of a shut down economy would not have downward pressure on the markets. We have not even seen any financial institutions fail yet due to business failures and uncollectable loans.

If you use 2008 as an example, most stocks and the market bottomed out in early 2009. But some stocks hit their absolute lows in 2008 when people were bailing out of mutual funds and they had to sell to cover departures. When the stock is sold without a downward limit, if there aren't any buyers other than a low ball limit order, it gets filled. If there's a stock you want, the fundamentals are sound, and you're patient, don't be afraid to use a reasonable low limit order. On a panic day, you get downward spikes. You may not have success, but it costs nothing to try.

In times like these, it's sometimes easy to spot the stock's bottom (the point at which available shares are almost always bought up by savvy buyers with limit orders).

Ted