This idea is a study of the top 4 US Airlines compared to inflation rates.
I still vividly remember the day I decided to learn about markets and economics.
It was the Friday after markets closed on January 29th, 2021 and Kevin O’Leary (Mr. Wonderful) was on CNBC debating the so called reddit short squeeze of gamestop with MA Sec of State William Galvin.
With Mr. Wonderful as a template I followed his investment ideas. In March of 2021, O’Leary was on CNBC again, this time explaining why investors should be short airlines.
That was at the Head in this head and shoulder pattern forming on US airlines.
O’Leary was shorting Airlines because he believes the office and business paradigm shifted to virtual so seamlessly during covid that in the future, businesses will not justify flying to see clients for business meetings when everything can be done virtual saving all the costs.
His short idea was coming during extreme Quantitative Easing from the FED and Airlines were rallying with every other equity in the markets.
But in the end he was right. Since March 2021 to the neckline of my ideas H&S, US airlines are down 45% in 1 year.
So why is inflation such a strong indication of what airline prices will do?
Because ~50% of Americans will stop paying for air travel as the first cost saving measure in hard economic times.
Inflation has been trending higher for over 15 years in a diverging pattern towards the 100Y trend of 3.52 inflation year over year.
My speculative outlook on airlines is short for the foreseeable future until inflation makes it down to the feds target of 2%.
Expect economy airlines like LUV to perform better than the other traditional airlines during this time as passengers look for the best deals.
If you like this idea, hit the boost and bookmark the idea for future updates. I plan to add my options strategies for the short and provide monthly CPI updates
I still vividly remember the day I decided to learn about markets and economics.
It was the Friday after markets closed on January 29th, 2021 and Kevin O’Leary (Mr. Wonderful) was on CNBC debating the so called reddit short squeeze of gamestop with MA Sec of State William Galvin.
With Mr. Wonderful as a template I followed his investment ideas. In March of 2021, O’Leary was on CNBC again, this time explaining why investors should be short airlines.
That was at the Head in this head and shoulder pattern forming on US airlines.
O’Leary was shorting Airlines because he believes the office and business paradigm shifted to virtual so seamlessly during covid that in the future, businesses will not justify flying to see clients for business meetings when everything can be done virtual saving all the costs.
His short idea was coming during extreme Quantitative Easing from the FED and Airlines were rallying with every other equity in the markets.
But in the end he was right. Since March 2021 to the neckline of my ideas H&S, US airlines are down 45% in 1 year.
So why is inflation such a strong indication of what airline prices will do?
Because ~50% of Americans will stop paying for air travel as the first cost saving measure in hard economic times.
Inflation has been trending higher for over 15 years in a diverging pattern towards the 100Y trend of 3.52 inflation year over year.
My speculative outlook on airlines is short for the foreseeable future until inflation makes it down to the feds target of 2%.
Expect economy airlines like LUV to perform better than the other traditional airlines during this time as passengers look for the best deals.
If you like this idea, hit the boost and bookmark the idea for future updates. I plan to add my options strategies for the short and provide monthly CPI updates
