BA does almost nothing right. So why is the stock up 52%?
We have all heard the old saw as to how “the market climbs a wall of worry.”
There is, of course, an inherent truth in this. Investors always take on a bit of risk in exchange for their gains. One might imagine that this is a well-reasoned and well-researched risk.
Yeah, well, you’d probably be wrong about that.
For most of the past eight months, most investors haven’t even shown the common rules of life we try to teach grade school kids, like “look both ways before you cross the street,” or “don’t trust that weird guy in the rusty old Buick offering you candy.”
They are not climbing the Wall of Worry. They are climbing a mountain of lies, ignorance and sheer stupidity.
Would You Be Willing to Volunteer to Make As Much Money As Humanly Possible?
That’s what we need the first 1,500 people who respond to this request to do. It’s the only way we can truly determine how much money our 92%-accurate “Wall Street Lie Detector” can make its users. If you’re willing to share your success with us, here’s how you can take part of it with our stock options trading service…
Into the Valley of Death…
Case in point: Back in March, Boeing (BA:NYSE) was trading for about $29 bucks a share, off some 73% from the 2007 high. And it pretty much deserved to be in this cellar, what with the global recession and all.
Heck, it was even tangled up in the whole Wall Street banking mess. Seems that one of AIG’s many twisted tentacles was an aircraft-leasing unit that crashed and burned, taking a chunk of BA’s backlog with it.
But this was right about the time that Washington and Wall Street began to beat the drum about “light at the end of the tunnel,” “green sprouts” and what. So what if BA is only reporting four aircraft orders (as compared to 18 the month before)? “If we wait for good news the stock will run on us. We’re going to outsmart the market and buy now!”
Thus we see BA shares climb that old wall of worry by some 16% in March.
Come April, Wachovia predicts that declines in aircraft volume and pricing would force BA to cut production levels at least 15%, and cuts its rating to “market perform.” Other analysts were less generous, suggesting that BA would underperform due to repeated failures to produce a working edition of its long-promised 787 Dreamliner. And just to put a dot on the “i,” the Pentagon went and canceled BA’s “Future Fighter” and missile programs.
“Don’t Worry, Be Happy!”
“Not to worry!” claimed the folks in BA’s C-suite. “Despite all of these delays and lost sales, we will still somehow bring in earnings of $5 a share. Or maybe $4.70.” And so we see BA shares rising 16% in April.
The folks at Goldman Sachs (GS:NYSE) were certainly impressed by BA’s bravado. They told their clients to completely disregard the fact that BA had surprised analysts to the downside by -4.1%, -110.03% and -4.4% over the previous three quarters.
Maybe they (Goldman) really are the smartest guys in the room. Not only did BA shares kick it up 11.26% in May, but BA actually managed to beat estimates for the quarter ending in June! For a while, it looked like that rally was going to extend right through June. Shares got as high as $53.33.
Oops!
But then BA had to announce yet another delay in the Dreamliner. And this was not one of the ever-so-common supply line issues investors had gotten numb to. Rather, it seems that there might be a problem with the wings, sort of, like, falling off?
As for the 787’s delivery schedule? Heck, by this point, BA had to confess that it really had no idea when the prototype might actually fly.
And so early July saw about half of 2009’s gains up in smoke.
But only for a little while. Washington continued to talk up its book, with inane comments like “the recession might even be over and we just didn’t notice.”
Washington’s hope – and smoke – encouraged BA investors to the tune of some 21% gains going into mid August.
No Fun Anymore!
Wow, if only they didn’t have to, like, sell planes or anything, these guys could go to the moon. But Boeing does have to make and sell planes – and to be frank, they were not doing a particularly good job of that task.
On Aug. 26, those comedians at Air Berlin told reporters at Aviation Week that the delays in the 787 program were just “no fun anymore,” and so they were considering canceling their order for 25 of the increasingly fictitious Dreamliners.
Can’t have that, now can we? Thus we read on Aug. 27 that the 787 would indeed fly before the end of this year! BA shares skyrocketed some 7.5% on the news. And they didn’t stop there either. By September, we were looking at $55.48. Could $60 or $80 or even $100 be far behind?
Well, no. Not really.
Secret Syndicate Poised to Launch Tiny Micro Cap!
At this moment, a powerful D.C.-based syndicate is poised to launch a tiny micro-cap stock into orbit. Early investors could make a potential 12… 18… even 24 times their money. Act now, and you could alter your financial status for years to come. Here are the details on this micro-cap stock…
The Usual Surprise
Here’s another one of those old chestnuts that just hold up so well: “How can you tell when a politician is lying? When his lips move!” The folks who follow the aircraft biz have taken to applying this adage to BA’s oft-misstated delivery dates and probable earnings.
And indeed, this week, we learned that delays in both the fairylike Dreamliner and BA’s bread-and-butter 747 line would cost the company $1.6 billion in write-downs for the third quarter of 2009. As for that forecast of $5 EPS they promised back in April? Yeah, well, it appears that was all smoke too. Look for $1.55 instead. Or maybe $1.35.
Surprise!
Now, just guess what BA shares did the day they revised profits down 73%.
They went up. (Not much, maybe 20 cents all told as of when I sat to write to you.)
Please Be Careful Out There
Despite all the disappointments, errors, misjudgments, misstatements, missed deadlines and missing profits, BA shares are actually climbing the wall of worry today.
I know this was a slightly long and no doubt boring story about the foibles of one particular group of surprisingly gullible investors. However, there is a great deal to be learned from this episode.
Some of these stocks are not “educated risks,” people. They are like taking candy from that pervert in the rusty old Buick. It’s all sweetness until the car door slams!
Article brought to you by Taipan Publishing Group. Additional valuable content can be found at www.taipanpublishinggroup.com. Republish without charge. Required: Author attribution and links back to original content.
