Is the sky falling?
From CNN.com: "Stocks sank Friday after oil hit a record above $78 a barrel and investors worried about escalating violence in the Mideast, sluggish retail sales and a lousy start to the earnings season. .... The world's most widely watched stock market gauge has lost nearly 400 points since the close of trade Tuesday and is now within shouting distance of falling into the red for the year."
Is this the beginning of a serious economic downturn? Is it time to pull out of the market?
Thoughts? Prognostications? Dire predictions?
posted by Sean @ 7/14/2006 01:49:00 PM
4 comments
4 Comments:
Well, I've been getting killed for a few months now. But I'm not sure its an indication of a bad market or bad choices.
Note: owning an airline stock when oil prices go to $78/barrel is bad.
Pete, I hope the airline stock you were holding was either JetBlue or Southwest. Southwest has remained unaffected by the high oil prices thus far, thanks to some really smart hedging when the price of aviation fuel was much lower. However, their hedges run out later this year, IIRC, so if you have Southwest stock now, you may want to sell some next time the price goes up a bit.
I wonder how well foreign airline stocks are doing? Emirates and Singapore are still making record profits, despite the high price of crude.
JetBlue, down 12% the day Israel/Lebanon went to hell and oil shot to $80 a barrel.
Not surprising. JetBlue had been turning a steady profit until Q4 2005, when high fuel prices were responsible for them posting a $42M loss.
I think the only way forward for airlines is probably to raise fares. Oil is not likely ever to be cheap again, with security concerns in the Middle East and the simple fact that we are running out of it.
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