The Perfect Storm of the Stock Market II

[Voodooman]

15 minutes ago, Albeniz said:

Well... except for Saudi, nobody could have expected oil to have fall en so badly, even to the point of negative $37 per barrel.

This one is really an honest mistake.

Must forgive, ok?

Don't you think the Saudis and Russians might be conspiring to kill US shade producers? If you want to do this, there is no better time really. 

 

[mersaylee]

1 hour ago, Keei said:

Depends how you see it. Glass half full or half empty. Assuming Boeing CEO is correct that it will take 2 yrs to reach 2019 level. Now that many aviation, tourism, hotel, cruise stocks are hit hard, many of the their stocks drop over 50%

So in the number of years holding the stock, the return of equity could yield 10~20% increase conservatively. Which is still much better than putting cash into fix deposit which yields 1~3% returns. 

Also in US, they are seriously lacking in public land transport. Rail is more of novelty than anything else. In order to travel from state to state, air is the way to go. Unless the fella is willing to drive for days or weeks to reach their destination.

The share prices may not have bottomed out. However many shares are already at a huge discount. Only need to be mindful of companies that could go bankrupt. But honestly many of the US companies are so called "too big to fall". For example US Gov will never Boeing fall, cos thousands and thousands of ppl will be out of jobs. Just like SG Gov will never let SQ fall. 

What i see WB doing is cutting his loss. You may be right that in 5 yrs time he'll buy back aviation. But honestly with his age, i don't know if he'll see to this day.

Unless you are looking at short term returns, then will not be a good choice. If you are in for the long game (5~10 yrs) with holding power, also depends on individual's appetite for risk. I see there's potential. 

Just my 2 cents

Good observations...

However, need to have hawk eyes to cherry pick the long lasting ones to bet on...not all will emerge from the perfect storm the same way...

may I offer a different lens...

aviation industry as a whole is hard hit as some insolvent airlines may just go bust...forced M&A...cancel order book...choose rental instead to wait out the storm...prolonged WFH has also proven that some jobs or even functions can be executed outside of office premises...less commercial traveling needed...plus, with 5G on the horizon...etc etc

all these can still affect Boeing and AB...though Boeing may not fail because it still has its military side of revenues...HuAt big time if there’s a major war...but no thanks, world peace is priceless 

[Freeder]

2 hours ago, Voodooman said:

Huh? Why serious lapse of mismanagement?

As other airlines hedge abt 2-3 mths, SIA hedge so long.. where’s the risk management? 
so is this not mismanagement or what?

if it’s their own money, will they do that themselves? So there’s Definitely no check n balance in place..

[Wt_know]

2 minutes ago, Freeder said:

As other airlines hedge abt 2-3 mths, SIA hedge so long.. where’s the risk management? 
so is this not mismanagement or what?

if it’s their own money, will they do that themselves? So there’s Definitely no check n balance in place..

perhaps, based on SQ capacity, they have high capacity compare to other airlines. that’s why SQ is top airline for many years. 

the problem is corona kill air travelling from 100% to 0% ... no such precedent ... not even 911 and Sars ...  

[Enye]

12 hours ago, mersaylee said:

Sifu, which price gantry to wait huh?

wah boss....don’t follow me lah

i always lose $$ de

😢😖

[Voodooman]

1 hour ago, Freeder said:

As other airlines hedge abt 2-3 mths, SIA hedge so long.. where’s the risk management? 
so is this not mismanagement or what?

if it’s their own money, will they do that themselves? So there’s Definitely no check n balance in place..

The board is usually the one that sets hedging policy, surely such big and long dated positions are not left to the treasury team to decide. 

If a prolonged war breaks out between Iran and Saudi and oil goes to USD150 per bbl, is the airline that hedges 3 months incompetent, especially if it had sold tickets 1 year ahead?  

I don't know % of hedge SIA did in 2023, and I don't know enough to know which fuel hedging strategies is correct for which airlines but many large companies will try to lock in some margins when their forward revenue is fully contracted and priced in, especially if they operate in a very volatile environment. 

But I agree hedging 33% up to 2023 is aggressive but Mr Mohshin thinks it is not such a bad idea back in 2017 to hedge 5 years forward. The market didn't disagree back then. 😂

https://www.theedgesingapore.com/aviation/sia-extends-jet-fuel-hedging-opec-cuts-sway-oil

 

Edited May 14, 2020 by Voodooman

[ToyotaShuttle]

36 minutes ago, Voodooman said:

The board is usually the one that sets hedging policy, surely such big and long dated positions are not left to the treasury team to decide. 

If a prolonged war breaks out between Iran and Saudi and oil goes to USD150 per bbl, is the airline that hedges 3 months incompetent, especially if it had sold tickets 1 year ahead?  

I don't know % of hedge SIA did in 2023, and I don't know enough to know which fuel hedging strategies is correct for which airlines but many large companies will try to lock in some margins when their forward revenue is fully contracted and priced in, especially if they operate in a very volatile environment. 

But I agree hedging 33% up to 2023 is aggressive but Mr Mohshin thinks it is not such a bad idea back in 2017 to hedge 5 years forward. The market didn't disagree back then. 😂

https://www.theedgesingapore.com/aviation/sia-extends-jet-fuel-hedging-opec-cuts-sway-oil

 

I think disclosure is more important than whether it was a good idea or not. 

I don't follow SIA or any airlines but did SIA disclose their hedging strategy to shareholders? Is this 4 year hedge a new thing? If they have been doing it all along and have proper disclosure then it is the shareholder's own fault for still continuing to hold the shares.

[Volvobrick]

Another 80 cents SQ shares will go below 3!  Let's see how soon it gets there. 

[Freeder]

8 hours ago, Voodooman said:

The board is usually the one that sets hedging policy, surely such big and long dated positions are not left to the treasury team to decide. 

If a prolonged war breaks out between Iran and Saudi and oil goes to USD150 per bbl, is the airline that hedges 3 months incompetent, especially if it had sold tickets 1 year ahead?  

I don't know % of hedge SIA did in 2023, and I don't know enough to know which fuel hedging strategies is correct for which airlines but many large companies will try to lock in some margins when their forward revenue is fully contracted and priced in, especially if they operate in a very volatile environment. 

But I agree hedging 33% up to 2023 is aggressive but Mr Mohshin thinks it is not such a bad idea back in 2017 to hedge 5 years forward. The market didn't disagree back then. 😂

https://www.theedgesingapore.com/aviation/sia-extends-jet-fuel-hedging-opec-cuts-sway-oil

 

Anyway, SIA will not be in any trouble as garmen will back her up all the way...
So the mgt iron rice bowl still intact..

Below excerpt from another forum..Sums it up for me..

[mersaylee]

8 hours ago, Volvobrick said:

Another 80 cents SQ shares will go below 3!  Let's see how soon it gets there. 

Sifu Enye mentioned $2 but that was before the rights exercise was announced...

[mersaylee]

9 hours ago, Enye said:

wah boss....don’t follow me lah

i always lose $$ de

😢😖

You mentioned $2 before the rights exercise...now must make revision to wait at the right gantry mah...

please lah sifu, I missed creative speed boat because my eyes were on this for a while thinking to do my NS to help the national pride a tiny little bit...

[Scion]

41 minutes ago, Freeder said:

Anyway, SIA will not be in any trouble as garmen will back her up all the way...
So the mgt iron rice bowl still intact..

Below excerpt from another forum..Sums it up for me..

aiyah.. most commentators are zhuge liang only after shit happens

if a Middle East conflict happens instead of this virus, and oil spikes, then everyone will praise him as a genius

hero or zero

[Chongster]

1 hour ago, Scion said:

aiyah.. most commentators are zhuge liang only after shit happens

if a Middle East conflict happens instead of this virus, and oil spikes, then everyone will praise him as a genius

hero or zero

Fair comment.  But for coronavirus, even if Saudi and Russia chut stunt in the oil market, I think SQ will still be ok.  

[Cauldron]

Think the next few months will be heavily influenced by the words and deeds coming out from the WH and POTUS. Cornered by events and Biden has not started to pile up the pressure  yet

 

Edited May 15, 2020 by Cauldron

[Throttle2]

4 hours ago, Freeder said:

Anyway, SIA will not be in any trouble as garmen will back her up all the way...
So the mgt iron rice bowl still intact..

Below excerpt from another forum..Sums it up for me..

Agreed.

only a f**king idiot would do that. 

 

[Wt_know]

13 minutes ago, Throttle2 said:

Agreed.

only a f**king idiot would do that. 

hedge big big .. if no corona sibei big bonus ... buy porky and gold lolex

if got corona ... no blame culture ... ah gong bailout

sure win ... 

Edited May 15, 2020 by Wt_know

[Throttle2]

20 minutes ago, Wt_know said:

hedge big big .. if no corona sibei big bonus ... buy porky and gold lolex

if got corona ... no blame culture ... ah gong bailout

sure win ... 

No corona, still lose.

lose less but still lose

f**king idiot lah

[Enye]

4 hours ago, mersaylee said:

You mentioned $2 before the rights exercise...now must make revision to wait at the right gantry mah...

please lah sifu, I missed creative speed boat because my eyes were on this for a while thinking to do my NS to help the national pride a tiny little bit...

boss...you talking about sia ah?

i thought previous post was on capitaland

sia i cut loss on last day of cr liao....that one confirmed actualized losses

😭