Market analysts broadly agree that airline stock is a poor long-term investment. Robert Crandall, American Airline’s former CEO said of his airline, “It’s a great company that does important work. But airlines are not an investment.” (BTW, you might get a chuckle out of his more colorful comments back in the days of the deregulation debate by googling him). What about short-term though? I submit to you there is a great deal of money to be made, if you gamble correctly.
In July I purchased a sizeable amount of United stock for $3.15/share. The stock closed at $9.72 on Friday and was up to $10.17/share during intraday trading. Selling now would fund my travel for the foreseeable future, but something is holding me back. I got burned when the NASDAQ tanked in 2001 and would hate to see all this potential profit from Untied stock disappear overnight, but the more I study Untied—despite the continued losses, unfunded pensions, and other deficiencies—the more I think that United will prevail and *when* United and Continental merge next year, the stock will climb even higher. If oil unexpectedly rises, however, the stock could tank fast.
I concede that my investment in United is an emotional one, but I hope that emotional attachment is not clouding my judgment on whether to cash in now or gamble a little longer. The house may always win in Vegas, but not in the stock market. I’m holding off selling for now.
United’s looking good right now, relatively speaking. Photo courtesy TD Ameritrade