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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 691.72-0.1%Jan 16 4:00 PM EST
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To: Dwight E. Karlsen who wrote (28052)10/1/1999 12:01:00 AM
From: Benkea  Read Replies (1) of 99985
 
Dwight:

"I believe it was Paul Allen, co-founder of MSFT, who said that if you combine the total airline co profits and losses for the last 10 years, you'd have a net loss. I read that in 1996.

And yet, people have to fly. It doesn't matter if you're an exec of a nutz company like Priceline.com, or an oil company employee, they gotta fly. But I feel silly buying an airline stock, because they're not hip to own."

It goes back MUCH longer than 10 years. Airlines have probably the worst economics of any business ever created. Our current environment of wildly rising oil prices (their #1 expense), higher interest rates (their #2 expense being so leveraged), and rising wages (their #3 expense as a labor intensive industry), and inflation (since they are such a capital-intensive, low-return business) is POISION (not to mention the possibility of a recession).

Everyone uses utilities too, but they are not terrific investments.
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