tara23
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Buying Shares In Aviation

Sun Jul 14, 2013 9:15 am

Hello everyone,

Iv been thinking about getting into buying shares in aviation. I understand that boeing is on the share market but I wondered if airbus was too?

Has anyone had any experience with buying shares in aviation and which sector did you buy into? Airliners/manufacturers e.t.c

Thank you to anyone for your responses.
 
flyingturtle
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RE: Buying Shares In Aviation

Sun Jul 14, 2013 12:11 pm

A friend of mine who studies economics told me not to invest in airlines or in the big airplane producers like Airbus (EADS) or Boeing. Those shares are frequently traded, the market is efficient, and everybody knows everything about these big ones. Because industry forecasts, the upcoming product portfolio and problems in manufacturing/delivering airplanes are quickly communicated (even on airliners.net), you do not have a real advantage against other traders when trading these shares.

I suggest analyzing manufacturing suppliers (like comms and nav equipment, safety equipment etc.) or small enterprises (Pilatus, Beech, Cessna, Bell, Alenia...) to see if they are currently undervalued, or if they offer have promising products in the near future.

Boeing or Airbus? Run like hell. Their markets are so saturated, the competition is so fierce, so that they do not reliably bring in large profits compared to the company size.



David

[Edited 2013-07-14 05:25:08]
Keeping calm is terrorism against those who want to live in fear.
 
kiwiinoz
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RE: Buying Shares In Aviation

Mon Jul 15, 2013 9:00 am

I had airline stocks for a while and they did OK. I tried to stick with anything tied to China, where all of the potential growth is.

China Southern is listed on the US stock market, (ZNH), and looks a good price at the moment at $19.55.

Boeing stocks also probably OK for the short term as there will be some uside to the price once the fire hysteria dies down
 
Hywel
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RE: Buying Shares In Aviation

Mon Jul 15, 2013 10:31 am

Yes, I've had shares in easyJet and Ryanair for about a year now. They've had huge growth (easyJet is up 146% in 12 months) and I've been able to make large profits. Just sold a large bunch and taken out the cash, even though they'd grow more if I left them.
 
tara23
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RE: Buying Shares In Aviation

Mon Jul 15, 2013 11:17 am

That's

Quoting Hywel (Reply 3):

That's great news for you. The only other thing I'm not sure about is how do you actually buy shares? Iv been on
the net but can't seem to find exactly how to invest...
 
Hywel
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RE: Buying Shares In Aviation

Mon Jul 15, 2013 11:33 am

Quoting tara23 (Reply 4):
That's great news for you. The only other thing I'm not sure about is how do you actually buy shares? Iv been on
the net but can't seem to find exactly how to invest...

I don't know how it works in Australia, but in the UK there are various online stockbrokers where you can buy/sell shares. They charge around £10 in fees for each transaction. I use Hargreaves Lansdown and they have a good mobile app to manage your portfolio:

http://www.hl.co.uk

I'd just advise you to research carefully. When I first started trading in stocks/shares, I had an introductory offer of no fees for the first month, so I bought tiny amounts (£20 here, £10 there). Some of them completely collapsed - I bought £20 of shares in a South American oil exploration company that was rumoured to be on the verge of huge success, and now those shares are worth nothing. Luckily I hadn't put a grand into it. The others more than made up for the losses though.

Airline stocks CAN be risky - if there was another oil crisis, major terrorism incident or aircraft crash, the share price could plummet.
 
Pyrex
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RE: Buying Shares In Aviation

Mon Jul 15, 2013 12:48 pm

Quoting tara23 (Reply 4):
The only other thing I'm not sure about is how do you actually buy shares? Iv been on
the net but can't seem to find exactly how to invest..

No offense to you, but that probably means you shouldn't be buying shares in the first place, let alone in something as volatile as airlines (which are dominated by traders / momentum plays, as no-one in their right mind would invest in them for the long haul).
Read this very carefully, I shall write this only once!
 
Hywel
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RE: Buying Shares In Aviation

Mon Jul 15, 2013 12:55 pm

Quoting Pyrex (Reply 6):
No offense to you, but that probably means you shouldn't be buying shares in the first place, let alone in something as volatile as airlines (which are dominated by traders / momentum plays, as no-one in their right mind would invest in them for the long haul).

But there's always time to learn and start. I did extensive research and read many books before starting to dip my fingers into the stock market. You can't just start trading without prior research.
 
PPVRA
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RE: Buying Shares In Aviation

Mon Jul 15, 2013 7:50 pm

Quoting flyingturtle (Reply 1):
A friend of mine who studies economics told me not to invest in airlines or in the big airplane producers like Airbus (EADS) or Boeing. Those shares are frequently traded, the market is efficient, and everybody knows everything about these big ones. Because industry forecasts, the upcoming product portfolio and problems in manufacturing/delivering airplanes are quickly communicated (even on airliners.net), you do not have a real advantage against other traders when trading these shares.
Quoting flyingturtle (Reply 1):
Boeing or Airbus? Run like hell. Their markets are so saturated, the competition is so fierce, so that they do not reliably bring in large profits compared to the company size.

Advantage against other traders? This isn't the olympics!

Buying smaller companies might be more profitable, but with higher profit comes higher risk. Boeing, being a "large cap" company, has a different - i.e., lower - risk profile than many of their suppliers.
"If goods do not cross borders, soldiers will" - Frederic Bastiat
 
johns624
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RE: Buying Shares In Aviation

Mon Jul 15, 2013 7:56 pm

If he's new into investing, he probably should start with mutual funds.
 
stlgph
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RE: Buying Shares In Aviation

Mon Jul 15, 2013 8:08 pm

I've bought into carefully select airlines and I've bought into small cap company stocks which are part of the 'greater' supply chain. I definitely recommend doing your homework and looking into those.
if assumptions could fly, airliners.net would be the world's busiest airport
 
cmf
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RE: Buying Shares In Aviation

Mon Jul 15, 2013 8:16 pm

Quoting tara23 (Thread starter):

I don't want to discourage you but based on your questions you're not ready to invest in the stock market. My suggestion is you start by making "fake" trades to get your toes wet about how it works. Do a virtual valet of the size you plan to invest and make fake trades and see how you do before you put real money behind it.
Don’t repeat earlier generations mistakes. Learn history for a better future.
 
WestJet747
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RE: Buying Shares In Aviation

Mon Jul 15, 2013 8:39 pm

tara23, for the love of god, do NOT put all your money (however little it may be) in aviation. The first thing I was taught in finance is to always diversify your portfolio. The market is cyclical, and different sectors are hit at different times. The best way to not get ruined by a particularly awful down period is to make sure you spread your money around a little, because often when one industry in a downturn, another will be having some degree of success.

Quoting flyingturtle (Reply 1):
Boeing or Airbus? Run like hell. Their markets are so saturated, the competition is so fierce, so that they do not reliably bring in large profits compared to the company size.

On the contrary, Boeing Corporation and EADS are blue-chip buys who are consistently profitable. You're looking too much at them from a commercial aviation standpoint and forgetting that their success is driven by fiercely profitable military/defense divisions (margins being in the area of 10% last I heard).

Quoting Pyrex (Reply 6):
No offense to you, but that probably means you shouldn't be buying shares in the first place

Everybody needs to start somewhere. There have been people wildly successful in the game who have far less education than you or I. Of course many times it's the result of luck rather than a solid strategy, but not always.

My advice to tara23 would be to make use of the free resources available on the internet to at least get a base knowledge of trading first. Getting one of those "For Dummies" books wouldn't even be a bad idea either. "Learning the hard way" can be very damaging when it comes to trading.

Quoting PPVRA (Reply 8):
Advantage against other traders? This isn't the olympics!

It definitely is. There are generally three broad ways to have success in the stock market:

1. Have a good hold strategy and a lot of patience.
2. Be diligent in making trades based on information before speculators come and mess things up for everyone.
3. Get lucky as a speculator (not recommended).

If you have an advantage over the millions of speculators out there, you'll do just fine.

Quoting cmf (Reply 11):
My suggestion is you start by making "fake" trades to get your toes wet about how it works.

This. (thumbsup)

I recommend MarketWatch and [url=www.wallstreetsurvivor.com]Wall Street Survivor[/url]. Conveniently, they're usually the first two that pop up in a Google search for virtual stock exchanges.
Flying refined.
 
FlyPNS1
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RE: Buying Shares In Aviation

Mon Jul 15, 2013 8:41 pm

Quoting flyingturtle (Reply 1):
Boeing or Airbus? Run like hell. Their markets are so saturated, the competition is so fierce, so that they do not reliably bring in large profits compared to the company size.

Not totally true. I've made very good money on my EADS (Airbus parent) stock over the past year. In fact, EADS stock has well out-performed the broader market over the past few years. It is up 50% compared to one year ago. Not to mention the EADS stock also pays a dividend which makes the return even better.

Note, I'm not necessarily recommending you buy EADS at this time as much of the room for the stock to go up has probably been exhausted.

Quoting flyingturtle (Reply 1):
A friend of mine who studies economics told me not to invest in airlines or in the big airplane producers like Airbus (EADS) or Boeing. Those shares are frequently traded, the market is efficient, and everybody knows everything about these big ones.

No offense to your friend, but the reasons listed don't necessarily mean that EADS or Boeing are a bad investment.

Now, I don't necessarily recommend airlines or aviation stocks for a first time investor. However, there is money that can be made in these stocks and anyone who says otherwise hasn't done their research.
 
PPVRA
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RE: Buying Shares In Aviation

Mon Jul 15, 2013 9:52 pm

Quoting WestJet747 (Reply 12):
Quoting PPVRA (Reply 8):
Advantage against other traders? This isn't the olympics!

It definitely is. There are generally three broad ways to have success in the stock market:

1. Have a good hold strategy and a lot of patience.
2. Be diligent in making trades based on information before speculators come and mess things up for everyone.
3. Get lucky as a speculator (not recommended).

If you have an advantage over the millions of speculators out there, you'll do just fine.

If you take the approach that investing is a race and you are competing with other investors to see who makes more money, you are going to end up taking high risks and probably lose money.
"If goods do not cross borders, soldiers will" - Frederic Bastiat
 
WestJet747
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RE: Buying Shares In Aviation

Mon Jul 15, 2013 10:44 pm

Quoting PPVRA (Reply 14):
If you take the approach that investing is a race and you are competing with other investors to see who makes more money, you are going to end up taking high risks and probably lose money.

It has nothing to do with trying to make more money than the next guy, it's about being smarter than the next guy to make sure you don't lose money. Your comment seemed to suggest complacency, which will always make you a loser in the stock market.

Also, it's a misnomer to say that high risks will probably make you lose money. The stock market is inherently risky, and there's a right way and a wrong way to manage that risk. The right way would be by making trades that meet your own self-designed criteria (which goes back to being smarter than the next guy to design more effective criteria). The wrong way would be to trade because you say "I've got a good feeling about this one!" (which would make you a speculator).
Flying refined.
 
Alias1024
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RE: Buying Shares In Aviation

Mon Jul 15, 2013 11:42 pm

Quoting tara23 (Reply 4):
The only other thing I'm not sure about is how do you actually buy shares? Iv been on
the net but can't seem to find exactly how to invest...


It sounds like you need to do a lot more research before jumping into the stock market. Head down to the library and pick up a couple books on investing and trading (they're two different things) and learn as much as you can. Try to decide what your goals are and find a trading or investing strategy that matches your temperament, risk tolerance, and those goals.

Once you've got some basic footing for how the market works and what you want to do, find a broker, fund your account, and start looking for opportunities. If you are going to be an active trader, I'd recommend paper trading first, which others have already mentioned. You'll learn a ton about not just the market, but about yourself, as often your own emotions and temperament can be your biggest enemy.
It is a mistake to think you can solve any major problems with just potatoes.
 
Hywel
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RE: Buying Shares In Aviation

Mon Jul 15, 2013 11:58 pm

Another major piece of advice is this:

Never, ever buy shares because a newspaper column or website has “tipped” them to be a good buy – always make your own informed decisions. Six months ago a big newspaper in the UK tipped a company (who I won't name) to be “achieving strong growth in the next few months”, with a strong buy recommendation, claiming there were no obstacles to growth. I had severe doubts after doing some independent research so didn't buy in.

Now their share price has fallen 142% in 6 months – it will undoubtedly recover for long-term investors, but anyone hoping to make some quick money will have been left bitterly disappointed. I wonder how many armchair investors bought shares after reading the newspaper that day...
 
einsteinboricua
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RE: Buying Shares In Aviation

Tue Jul 16, 2013 1:44 am

If there's something I've noticed is that airline stocks are very volatile. A rise in oil prices can send them plummeting. I would invest in Boeing or Airbus.
"You haven't seen a tree until you've seen its shadow from the sky."
 
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Aesma
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RE: Buying Shares In Aviation

Tue Jul 16, 2013 2:18 am

I know the answer to your questions and have never had a share or investment to my name. More leg work definitely needed.

As for airlines, as some say, the best way to become a millionaire with an airline is to start as a billionaire !
New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
 
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hOMSaR
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RE: Buying Shares In Aviation

Tue Jul 16, 2013 2:29 am

Quoting Hywel (Reply 17):
Now their share price has fallen 142% in 6 months

How, exactly, does a stock fall more than 100%?

Do the shareholders now owe money for each share they own?
The plural of Airbus is Airbuses. Airbii is not a word, and doesn't even make sense.
 
PPVRA
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RE: Buying Shares In Aviation

Tue Jul 16, 2013 2:37 am

Quoting WestJet747 (Reply 15):
The right way would be by making trades that meet your own self-designed criteria (which goes back to being smarter than the next guy to design more effective criteria).

What flyingturtle said about large companies having thinner margins because a lot of people are monitoring, analyzing and trading them constantly is true, but that fact does not mean you should stay away from them. Staying away from them simply because of this does not mean you are being smarter.

What I meant with my statement is what you just alluded to: you must create a custom strategy based on your risk tolerances and stick to it.
"If goods do not cross borders, soldiers will" - Frederic Bastiat
 
Pyrex
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RE: Buying Shares In Aviation

Tue Jul 16, 2013 5:02 am

Quoting Hywel (Reply 7):
But there's always time to learn and start. I did extensive research and read many books before starting to dip my fingers into the stock market. You can't just start trading without prior research.

I am a professional in the finance sector who knows the fundamentals of how to evaluate a share and the fact is that I don't do it for yself. I truly believe that, if protections of retail investors had any teeth, most individual investors would only be allowed to buy mutual funds and ETFs (and if they do or not does not really affect me personally, so am not being self-serving here). Being able to analyze all the information there is about one single company to make an informed investment is a huge time commitment, and requires constant monitoring. Now multiply that by the dozens of different securities you would need to look at to have an even remotely diversified portfolio and there is simply no way a single person can do it, even if you don't have a job and dedicate yourself full time to this. Not to mention that, as a small investor, to achieve the required level of diversification buying individual securities on a small portfolio you would get eaten alive by fees and spreads, even if you use a discount brokerage.

Quoting Aesma (Reply 19):
As for airlines, as some say, the best way to become a millionaire with an airline is to start as a billionaire !

That has always been, and still is the case. Airlines aren't so much businesses but vast destroyers of capital.

Quoting hOmSAr (Reply 20):
How, exactly, does a stock fall more than 100%?

Do the shareholders now owe money for each share they own?

Was thinking the exact same thing. As far as I am aware assessable shares went the way of the dodo a long time ago.
Read this very carefully, I shall write this only once!
 
WestJet747
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RE: Buying Shares In Aviation

Tue Jul 16, 2013 5:53 am

Quoting hOmSAr (Reply 20):
How, exactly, does a stock fall more than 100%?

They can fall more than 100% from the purchase price.

For example, Hywel could have bought the share at $100 twelve months ago. Six months later it peaked at $150. It then crashed to its current price of $8. Therefore, it fell 142% (of the purchase price).

Quoting PPVRA (Reply 21):
What flyingturtle said about large companies having thinner margins because a lot of people are monitoring, analyzing and trading them constantly is true, but that fact does not mean you should stay away from them. Staying away from them simply because of this does not mean you are being smarter.

I was one of the posters saying the opposite. I never suggested they stay away from them.

I think we may be arguing about two different things   

Quoting Pyrex (Reply 22):
Was thinking the exact same thing. As far as I am aware assessable shares went the way of the dodo a long time ago.


I thought assessable shares couldn't "fall" more than 100% since the money owing to the company was simply to recover market value of the stock since the shares were sold at discount?   
Flying refined.
 
Hywel
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RE: Buying Shares In Aviation

Tue Jul 16, 2013 9:54 am



Quoting WestJet747 (Reply 23):
They can fall more than 100% from the purchase price.

For example, Hywel could have bought the share at $100 twelve months ago. Six months later it peaked at $150. It then crashed to its current price of $8. Therefore, it fell 142% (of the purchase price).

What WestJet747 said. I didn't actually buy any shares in this company though.

[Edited 2013-07-16 02:55:56]
 
tara23
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RE: Buying Shares In Aviation

Tue Jul 16, 2013 11:37 am

That's great thank you so much for all your feedback (and none offence taken)

The reason I posted this topic in the first place is because you HAVE to start somewhere and that's exactly what I'm doing.

I'm definitely not going to be throwing my money about the market left, right and centre. I'm going to take all your advice and buy a simple book to explain the basics first and then invest a smaller amount first. During my study time I will do some virtual/pretend share buying and see where I would have been at in 6 months time.

I really do appreciate all your advice, it's very interesting to hear about all your experiences! Keep them coming if you have any more

Warm regards,

Tara
 
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hOMSaR
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RE: Buying Shares In Aviation

Tue Jul 16, 2013 3:06 pm

Quoting WestJet747 (Reply 23):
Quoting hOmSAr (Reply 20):
How, exactly, does a stock fall more than 100%?

They can fall more than 100% from the purchase price.

For example, Hywel could have bought the share at $100 twelve months ago. Six months later it peaked at $150. It then crashed to its current price of $8. Therefore, it fell 142% (of the purchase price

That's kind of convoluted logic, because it requires two different reference points.

Using your example, I'd either say the stock dropped 92% (if using a $100 purchase price as the reference), or it dropped almost 95% (if using the $150 peak).

I've never heard anyone use that kind of math to say something dropped 142%.

Mathematically, if something goes down more than 100%, it's in the negative.
The plural of Airbus is Airbuses. Airbii is not a word, and doesn't even make sense.
 
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zkojq
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RE: Buying Shares In Aviation

Tue Jul 16, 2013 3:27 pm

Welcome to airliners.net  

Initially at least, I wouldn't recommend buying shares in foreign companies as it will involve dealing in other currencies and leave you exposed to exchange rate fluctuations. As others have mentioned it is wise to stay away from airlines. Even during healthy economic times, they aren't particularly profitable. Porter's five forces model helps to explain why (http://bit.ly/1aHIS9W). The Aviation Industry however is larger than just airlines e.g. both Sydney and Melbourne Airports are listed on the Australian Stock Exchange; they may or may not be worth investing in.

Quoting tara23 (Reply 25):

In addition to what has already been said, Australia, like New Zealand has a dividend imputation system. You should do a bit of reading/research into how to make the most of this. Its very handy. Good luck.

Quoting tara23 (Thread starter):
Has anyone had any experience with buying shares in aviation and which sector did you buy into? Airliners/manufacturers e.t.c

COPA Airlines has an incredibly high profit margin.

Quoting Hywel (Reply 7):
But there's always time to learn and start

   Exactly.
First to fly the 787-9 with Air New Zealand and ZK-NZE (2014-10-09, NZ103)
 
Alias1024
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RE: Buying Shares In Aviation

Tue Jul 16, 2013 4:27 pm

Quoting tara23 (Reply 25):
I'm going to take all your advice and buy a simple book to explain the basics first and then invest a smaller amount first. During my study time I will do some virtual/pretend share buying and see where I would have been at in 6 months time.

Get more than one. Every author will have their own ideas, biases, and way of finding companies to purchase. Also, the six month time frame will only really tell you how good you are if you are trading. If you're looking to build a long term investment portfolio, stocks you plan to hold for several years or more, I'd be far more concerned with finding companies with great financials (income statement, balance sheet, cash flow) and competitive advantage, and not performance over a 6 month period. A mutual fund or hedge fund changing its mind on a stock can unfairly beat up a good company's stock for weeks or months as they slowly unwind their trade.
It is a mistake to think you can solve any major problems with just potatoes.
 
WestJet747
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RE: Buying Shares In Aviation

Tue Jul 16, 2013 4:42 pm

Quoting hOmSAr (Reply 26):
That's kind of convoluted logic, because it requires two different reference points.

Using your example, I'd either say the stock dropped 92% (if using a $100 purchase price as the reference), or it dropped almost 95% (if using the $150 peak).

I've never heard anyone use that kind of math to say something dropped 142%.

Mathematically, if something goes down more than 100%, it's in the negative.

Hey, don't shoot the messenger. I was just providing a possible explanation  

But, if something goes down more than 100%, it's only negative assuming a base of 0. Of course using two points of reference gets kind of messy, but it's still mathematically correct, just not ideal.

Quoting zkojq (Reply 27):
Porter's five forces model helps to explain

Ah, Porter's Five Forces, my best friend in university    But even the simplest of SWOT analyses would tell you why dabbling in airline stock would not be the best idea.

Quoting zkojq (Reply 27):
both Sydney and Melbourne Airports are listed on the Australian Stock Exchange; they may or may not be worth investing in

What about investing in Perth Airport stock? It can't go anywhere but up, right?   
Flying refined.

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