Cruiselines and Airlines

Are these two ginormous industries a good investment?

May 11, 2020

As things are starting to look closer to returning to world of "normal" or at least in the sense that we will be able to start leaving our homes and return to our jobs, it has become more and more obvious of the permanent affect this pandemic has left us with.

Back about 8 weeks ago when we were merely joking about the idea that we would need to shut down our businesses, I decided to take advantage of a down market and invest in some stocks. My thought process was that this was just going to be a temporary set back and I wanted to put myself in a position where I emerged better than I had entered. 

I discussed this weeks ago, but stocks has always been one of those things that intimidated me and as a result something I've always avoided. But for some reason this seemed like a great opportunity to learn and so that's what I've been doing - learning.

Learning takes time though and this seemed like a once in a lifetime opportunity, so I put quite a lot of money into the stock market when it was basically at its bottom market point. Using common sense, I decided to diversify that investment into markets being directly affected by the virus which included airlines, cruise-lines and hotels. 

I specifically targeted businesses that I have had personal encounters with, like Royal Caribbean and JetBlue, for example. Companies that both seem like shining stars, destined to be too great to fail, even during tough times. The investment goal was to invest in them when they were valued at 75% less than their normal trading value, just months before. Then hold until the market stabilized and sell, essentially transforming savings accounts into 2x multiples. 

I think for a lot of us, we expected this shutdown to be a temporary setback, but as deadlines keep getting pushed back and the shutdown extended, things have started to change our outlook on the matter.

I think we're now at a point of permanent impact. In the past couple of weeks, I've personally witnessed it. I watched my brother stick his hand out as an introduction to a colleague just to see the other person back up in disgust. I've watched others police each other on how to wear masks, how to walk down aisles and even in family environments where we would once grab and hug each other resorting to talking to each other yards away. 

Something that was once a public standard, like air travel is now something viewed as a breeding ground and transportation system for viral diseases. In March, it seemed obvious that airlines and cruiselines would undoubtedly bounce back, but as time goes on, I wonder the possibility of seeing entire industries like these completely die out. 

I think in the next 6-18 months we will start to see the impact this has had on us. The economy, how we interact with each other and how we engage in public scenarios. Bars, clubs, festivals, crowds... everything is going to be transformed.

Yet I still hold on to a bit of optimism. I think we will figure it out. Even as titans like Warren Buffet remove themselves from airline investments, I still think the demand is there. Maybe it won't ever return to what it was, but I still think I made a wise investment and have yet to take my money out as proof.

I think the idea that we will bounce back in 6 months is no longer a viable suggestion, but I feel like this is still only a temporary impact. After 9/11 people shared similar fears and those passed over time.

If anything I think this was a good practice drill for future, possibly more dangerous pandemics.

What are your thoughts?

(wal•do) — Person
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