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Airbus CEO warns recovery from pandemic could take years (3-5).

Timeframe to hold onto my EADSY lotto tickets just went a bit longer (I bought @ $21, currently trading at $15.62)
‘Double down and buy some cheaper tickets at ~ 16.
 

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‘Double down and buy some cheaper tickets at ~ 16.
Sunk cost fallacy. That's how i ended up with a bunch more CCL that's still underwater :)
At this point, I'm not asking myself if it would be more profitable to bring down my $ average for my existing bets. I'm instead considering if I can make more money by taking the new money and putting it into the broader market (large cap ETFs) at the right time. Now though, IMO, is not the right time.
-g
 

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True. A 3-5 year ROI is too long to wait.

I'm pissed. TSLA is dropping this morning on an Elon tweet. Once I get my work caught up I'm going to look closely at my stocks this weekend and see about making some moves next week.
 

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Discussion Starter #284
Airbus CEO warns recovery from pandemic could take years (3-5).

Timeframe to hold onto my EADSY lotto tickets just went a bit longer (I bought @ $21, currently trading at $15.62)
Would this be a time for someone who has no shares on EADSY to get into if playing the long game?

How much time would you say it would take?

Would you speculate that, if playing the long game, they could get back to their $30+ share price?
 

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Yes, absolutely, given enough time both EADSY and BA will see big numbers again. As previously discussed, baring another big war or another pandemic, probably 3 to 5 years. BA needs to take advantage of this down-time opportunity to get their other issues sorted out so that when things do return to "normal" they'll be able to get the 737 Max back into the air.

Honestly, I wish I'd have taken the opportunity to back the truck up and grab some more BA when it dropped below $100 back in mid-March.

 

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Would this be a time for someone who has no shares on EADSY to get into if playing the long game?

How much time would you say it would take?

Would you speculate that, if playing the long game, they could get back to their $30+ share price?
I'm no expert but the CEO is talking about 3-5yrs. I think he knows his market better than me.

Problem is that you are betting on one industry to recover.
Yes, absolutely, given enough time both EADSY and BA will see big numbers again. As previously discussed, baring another big war or another pandemic, probably 3 to 5 years. BA needs to take advantage of this down-time opportunity to get their other issues sorted out so that when things do return to "normal" they'll be able to get the 737 Max back into the air.

Honestly, I wish I'd have taken the opportunity to back the truck up and grab some more BA when it dropped below $100 back in mid-March.

The biggest "problem" with the airline mfg recovery is that it will lag airline travel demand and consumer demand. Consumers will need to start spending again, then they will start spending on business/leisure travel, and THEN airlines will start ordering planes again.
Much like what my friend told me about the oil market, if you want to go long, why not go long on the first item (rebounding consumer demand)?

I suspect you'll see better ROI on betting on SPY.
Peak was $338
Nadir was $223 (34% down).
Currently trading at $282.79 (only 16% down).

I personally think this is irrational with 30M people out of work an a brutal earnings reporting season coming for Q1 (and likely Q2 as well), the price will drop down to $223 or lower (people jumped back in @ $223 b/c they thought it was a crazy good price, if the price crashes back to $223 I suspect it would go down more because those there will be less people who lost money, put more money in at $220ish to turn the trend around, and will be willing to pour in more money a second time.

I have a chunk of cash and am waiting for the general trend to start improving. I suspect we'll see more infections in the summer as some states loosen up too quickly.... and i hope it doesn't happen but suspect that we see a second wave this fall. That would suck. Both of these triggers will put downward pressure on the market.
 

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Agreed. There will be a second wave with loosened restrictions and then again this fall count on it.
 

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Agreed. There will be a second wave with loosened restrictions and then again this fall count on it.
So are you gong to bet on it?
At the risk of turning this thread into /r/wallstreetbets,
I can think of two strategies worth considering:
I'll use SPY (S&P 500 ETF) as a proxy for the market as a whole but any quality stock you think has longterm value is suitable.

SPY is at $282 today.
It dropped to $223 at the worst of it.
It's still down from it's peak of $338

1) If you think the stock price is over valued and WILL drop in a specific timeframe, you could setup a bear put spread


You spend money now and are betting for the market to drop. If the market goes below the strike price of the put option you sold, your upside is capped. If market goes up, you just lost the value of your option.
...
2) you want to by SPY or a blue Chip stock at a discount. You put down the money to cover 100 shares of the underlying stock and you are paid for the right to make you buy a stock at that price. The idea there is to set the strike price at a discount level you'd be happy with getting.


So, in the context that you believe the market is irrational, I'm considering one or both strategies.
 

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One of you asked about refinancing the mortgage. I looked again this morning and I believe I'm going to take the leap.

I owe 22 years on my current 30 year mortgage at 3.25%
The current rate on a fixed 15 year is 2.5%. With the reduced rate and time I can save ~ 28,000 by refinancing.

Edit: Well, scratch that Idea. I was looking at the purchase rates which are considerably lower than the refinance rates. Effing banks!
 

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One of you asked about refinancing the mortgage. I looked again this morning and I believe I'm going to take the leap.

I owe 22 years on my current 30 year mortgage at 3.25%
The current rate on a fixed 15 year is 2.5%. With the reduced rate and time I can save ~ 52,000 by refinancing.
That's amazing. Unfortunately, I cannot afford the payments to refi my house down to 15 years. Not comfortably.

I guess since you are going from 30yrs to 15yrs, it's makes it harder to compare the additional savings from interest vs the new refi costs. Have you figured that out after taking into account that you are tying up additional money which is going towards the principle in the 15 yr loan?

I get the idea that being able to say you own your house a decent amount of time before retirement is kind of nice but a) you will incur the refi expense and b) cash is now committed to be tied up and COULD be used for other investments. In exchange, you are getting 0.75% rate less on your existing principle. You are effectively locking in a specific rate of return on this additional funds.

It's a more complicated spreadsheet. the topline number always looks good (I'm going to save $52K) but i think the nuance should be analyzed sa well.
Ron, I'm not sure if you made the spreadsheet I alluded to yet but IMO its worth an analysis. LMK if you'd like me to throw something together on google docs and perhaps that might help you.

I have't worked the problem out entirely in my mind but i think you would build an amortization schedule for the 30yr note, build an amortization schedule for the 15 yr note, figure out how much additional cash you are tying up monthly, declare a certain rate you could have made if you just invested that money elsewhere, and then compare the two scenarios.

I suspect the real # after 15 years is "$52K (total interest savings) - some amount equal to the ROI on the additional money tied up with principle repayment - REFI expenses"
I haven't quite thought about how to figure out the breakeven point.

If you've already pulled the trigger, no worries. You'll clearly save money here. It's just a question of when and how soon you would pay yourself back for the REFI fees.
 

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Discussion Starter #291
One of you asked about refinancing the mortgage. I looked again this morning and I believe I'm going to take the leap.

I owe 22 years on my current 30 year mortgage at 3.25%
The current rate on a fixed 15 year is 2.5%. With the reduced rate and time I can save ~ 28,000 by refinancing.

Edit: Well, scratch that Idea. I was looking at the purchase rates which are considerably lower than the refinance rates. Effing banks!
I'm not sure if you've done the math, but why not just break up an extra month's worth of mortgage throughout the year. So, if you're paying $1,200/mo like I am, it'd be an extra $100/mo to your regular payment. On a 30yr loan, doing that will save you about 7yrs worth of payments over the life of the loan.

It'd save you the costs of refinancing, pay off your house faster / sooner saving money in the long run, and it'd also give you the flexibility to use any remaining discretionary cash to be used for other investments like Gunn said.
 

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Edit: Well, scratch that Idea. I was looking at the purchase rates which are considerably lower than the refinance rates. Effing banks!
Yeah, my distill.io web monitor I had setup got my all excited when my 3.375% jumbo went down to 3%.

Problem is that when I went to the CU website to confirm, it was only for new purchases. Drat.

On the plus side, we should be a little happy that banks are promoting continued home sales even during this time. This props up home prices... Which helps more people than helping a few people here or there save $50-100/mo.
 

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I'm not sure if you've done the math, but why not just break up an extra month's worth of mortgage throughout the year. So, if you're paying $1,200/mo like I am, it'd be an extra $100/mo to your regular payment. On a 30yr loan, doing that will save you about 7yrs worth of payments over the life of the loan.

It'd save you the costs of refinancing, pay off your house faster / sooner saving money in the long run, and it'd also give you the flexibility to use any remaining discretionary cash to be used for other investments like Gunn said.
This goes back to the idea of where best to park your money. Ron is not job insecure so he doesn't need to hoard the cash. Can he find a better place to put his money this month vs paying down his principle? IMO, probably not. Next month or after the market takes a second wave dump, the market might be a better place.
 

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No, I haven't pulled the refi trigger yet. I was just looking at rates this morning and that 2.5 percent rate caught my eye.
To put cash elsewhere the rate of return would need to be better than the 3.25% mortgage rate. Which is certainly do-able either through stock and/or dividend yield in the market.

What's also worth noting is that mortgage interest is tax deductible.

$52K was an initial (rough estimate) figure. After adjusting the numbers in the refi calculator the actaul figure was closer to $28K which would still have been a nice savings if I were able to get the lower rate - which I can't.
 

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I bought some EA today. They're reporting at market close I expect they'll do well in the current environment.
 

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Discussion Starter #296
What are your guys' thoughts on insurance giant, AIG? I / We all know they were hit hard in the Great Recession of 2008 - 2009 and required a massive bailout back then followed with a massive restructure. Up until the March crash, their share price seemed pretty steady at ~$55 +/- a few dollars. Now with everything going on now, their share price is half of that. I can't imagine their share price going back up after all this is over.
 

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I think you answered your own question.

I'd have to agree with you: "I can't imagine their share price going back up after all this is over."
 

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Discussion Starter #298
....

I think I meant to add a "not" in there. I guess that would answer my question still, lol.
 

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Well, EA beat earnings estimates as expected and yet the stock still falls - 5%. OTOH Activision Blizzard (ATVI) was up 5%.

Effing Murphy's law.
 

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Well, EA beat earnings estimates as expected and yet the stock still falls - 5%. OTOH Activision Blizzard (ATVI) was up 5%.

Effing Murphy's law.
Keep in mind that under classical stock value theory (whatever that is called by the real nerds), a stock price reflects the value of all the future profits of the company discounted to the present day.

EA is trading at the same price it was (ish) prepandemic (Jan) and even by early March.
They dropped 32% on March 20th (dont' know why -- I suspect it was a blockbuster game release that flubbed) and then climbed back up by May. You could argue that the pandemic and people staying home has already been "priced in" to the pre-earnings release price and there was no clear indication that future revenues would grow from this point. Hence the fall.
 
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