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Whitney Tilson Sold Nearly Half Of His Airline Stocks

Whitney Tilson Sold Nearly Half Of His Airline Stocks

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Sold airline stocks pia app book flight airline stocks

Whitney Tilson’s email to investors discussing the jobs report; Why he sold nearly half of his airline stocks yesterday; ‘bankrupt in just two weeks’ – individual investors get burned by collapse of complex securities.

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Q1 2020 hedge fund letters, conferences and more

The Jobs Report

1) Following up on yesterday's e-mail about the bull-bear debate on the market, today's shockingly strong May jobs report is a strong sign that the economy may be recovering more quickly than almost anyone was expecting.

With 21.2% of Americans still unemployed or underemployed (including part-time workers and those who gave up looking for jobs), we're far from out of the woods, but let's all hope that today's news is the start of even better news to come!

Why Tilson Sold Nearly Half Of His Airline Stocks

2) In my March 17 e-mail, just a few days before the market bottomed, I wrote:

What an incredible time to be an investor!

I continue to put my "dry powder" to work on big down days like yesterday, mostly in the S&P 500 (to prevent conflicts of interest, I can't buy any stocks we recommend in our various Empire Financial Research newsletters).

We're only recommending one airline stock, however, so yesterday I took advantage of the collapse in this sector to buy a basket of six others. I also bought a basket of seven financial stocks this morning. I can't predict how much further they might fall, but I'm confident that stocks like these will rally the most when (not if) the market turns.

As is often the case, I was a bit early. Hence, for quite a while, I was deep underwater on my airline and bank stocks.

Airline stocks in particular got pummeled, not only by the coronavirus crisis, but then again when Berkshire Hathaway (BRK-B) CEO Warren Buffett disclosed during his annual meeting on Saturday, May 2 that he'd dumped his large stakes in Delta (DAL), American (AAL), United (UAL), and Southwest (LUV).

I seriously considered pulling the plug as the stocks cratered the following Monday, but decided to think for myself and remembered why I'd bought them in the first place: as a levered play on an economic rebound.

I'm sure glad I did because as of yesterday's close, these airline stocks had soared between 39% and 80% since then (and are up big again today), versus only 10% for the S&P 500 Index, as this chart shows:

As you can see, every stock in the sector had a particularly good day yesterday, led by American, which soared 41% after announcing that:

[I]t would boost July flights 74% compared with this month, signaling that U.S. travelers freed from shelter-in-place orders are returning more quickly than expected.

The busiest days next month will have about 4,000 flights, up from 2,300 in June, said Vasu Raja, American's senior vice president of network strategy. The July figure is equivalent to 40% of capacity a year earlier, compared with 30% in June, the airline said Thursday. Capacity was even less in May, after a devastating collapse in flying spurred by the Covid-19 pandemic.

"People are hungry, eager to get back into the economy," Raja said in an interview. "We feel a real confidence to fly a much bigger July."

American's expanded schedule builds on recent indications from rivals that customers are starting to make their way back onto planes, at least for domestic flights, after fleeing in April because of the coronavirus. While traffic is still weak by historical standards, the airline's trends suggest that the worst has passed – and that the rebound in demand has a chance of outpacing the dire expectations the industry was outlining as recently as last month.

Such a huge rally left me with a dilemma: Should I bank my substantial profits – up 26% on average – or keep riding the wave?

This is a high-class problem – "Gee, I've made so much money, what to do?" – but it shouldn't detract from its importance. By far, the most costly mistakes I've made in my career were selling stocks like Apple (AAPL), Amazon (AMZN), Home Depot (HD), McDonald's (MCD), Ross Stores (ROST), and, most infamously, Netflix (NFLX) far too early.

To make this decision correctly, it's critical to remember what kind of company you're dealing with and why you own it. Is this a high-quality business and a long-term compounder that you can hold for years or even decades? Or are you just in it for a trade, hoping to catch a bounce?

I massively prefer the former, but am happy to occasionally do the latter, usually when I believe the sell-off in a particular stock or sector is overdone – as was the case with the airlines. But if so, you need to be quicker to take profits.

It's also important to look for signs that a stock or sector is caught up in a speculative bubble – a sure signal to sell.

In the case of airlines, this certainly appears to be the case, as this Yahoo Finance article highlights: 'Bored' Millennial Day Traders Boost Airline ETF's Assets 2,930%.

The combination of the big run-up and this article were the tipping point for me, so yesterday I sold nearly half of my airline stocks.

Why didn't I sell everything? Because long experience has taught me that I'm almost always too early in calling the tops of speculative bubbles so – perhaps cynically, I'll admit – I'm going to stick around for another possible leg up (which is already happening today!).

But this is key: No matter what happens, I'm going to be fine because I sized this bet correctly. In total, the six airlines stocks I bought were only about 3% of my assets at the time of purchase, now down to 2% after yesterday's sales.

Bankrupt In Just Two Weeks

3) Though I'll admit that my investment in airlines was speculative, I generally strongly advise against speculation of any sort. It's so easy to get into a lot of trouble, as this front-page story in the Wall Street Journal this week shows: 'Bankrupt in Just Two Weeks' – Individual Investors Get Burned by Collapse of Complex Securities.

The pandemic-fueled economic downturn has sparked turmoil in nearly every financial market. It has taken a particularly brutal toll on investors like Mr. Mark, who wagered on the roughly $7 trillion market for structured products: complex instruments that include ETNs, options-based strategies and certificates of deposits whose returns are tied to stocks or currencies.

The article raises difficult questions about what major financial firms and regulators should do to protect investors from highly speculative, risky investments.

But if you think big banks or regulators are going to protect you, please call me, as I have an oceanfront property in Kansas to sell you. You're on your own, so you'd better be a lot smarter than the folks profiled in this article.

If you want to take 5% of your portfolio and speculate like a maniac in things like cryptocurrencies, day trading, derivatives, and levered ETFs/ETNs, I won't fault you. When I'm in Vegas, I'll occasionally sit down with my friends and play a little blackjack, even though I know the odds are against me.

But if you're going to do something foolish for fun, it's critical to: a) be honest with yourself about what you're doing; and b) be disciplined about keeping it small. It's so easy to get sucked down a rabbit hole and blow yourself up...

Best regards,

Whitney

The post Whitney Tilson Sold Nearly Half Of His Airline Stocks appeared first on ValueWalk.

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A major cruise line is testing a monthly subscription service

The Cruise Scarlet Summer Season Pass was designed with remote workers in mind.

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While going on a cruise once meant disconnecting from the world when between ports because any WiFi available aboard was glitchy and expensive, advances in technology over the last decade have enabled millions to not only stay in touch with home but even work remotely.

With such remote workers and digital nomads in mind, Virgin Voyages has designed a monthly pass that gives those who want to work from the seas a WFH setup on its Scarlet Lady ship — while the latter acronym usually means "work from home," the cruise line is advertising as "work from the helm.”

Related: Royal Caribbean shares a warning with passengers

"Inspired by Richard Branson's belief and track record that brilliant work is best paired with a hearty dose of fun, we're welcoming Sailors on board Scarlet Lady for a full month to help them achieve that perfect work-life balance," Virgin Voyages said in announcing its new promotion. "Take a vacation away from your monotonous work-from-home set up (sorry, but…not sorry) and start taking calls from your private balcony overlooking the Mediterranean sea."

A man looks through his phone while sitting in a hot tub on a cruise ship.

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This is how much it'll cost you to work from a cruise ship for a month

While the single most important feature for successful work at sea — WiFi — is already available for free on Virgin cruises, the new Scarlet Summer Season Pass includes a faster connection, a $10 daily coffee credit, access to a private rooftop, and other member-only areas as well as wash and fold laundry service that Virgin advertises as a perk that will allow one to concentrate on work

More Travel:

The pass starts at $9,990 for a two-guest cabin and is available for four monthlong cruises departing in June, July, August, and September — each departs from ports such as Barcelona, Marseille, and Palma de Mallorca and spends four weeks touring around the Mediterranean.

Longer cruises are becoming more common, here's why

The new pass is essentially a version of an upgraded cruise package with additional perks but is specifically tailored to those who plan on working from the ship as an opportunity to market to them.

"Stay connected to your work with the fastest at-sea internet in the biz when you want and log-off to let the exquisite landscape of the Mediterranean inspire you when you need," reads the promotional material for the pass.

Amid the rise of remote work post-pandemic, cruise lines have been seeing growing interest in longer journeys in which many of the passengers not just vacation in the traditional sense but work from a mobile office.

In 2023, Turkish cruise line operator Miray even started selling cabins on a three-year tour around the world but the endeavor hit the rocks after one of the engineers declared the MV Gemini ship the company planned to use for the journey "unseaworthy" and the cruise ship line dealt with a PR scandal that ultimately sank the project before it could take off.

While three years at sea would have set a record as the longest cruise journey on the market, companies such as Royal Caribbean  (RCL) (both with its namesake brand and its Celebrity Cruises line) have been offering increasingly long cruises that serve as many people’s temporary homes and cross through multiple continents.

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As the pandemic turns four, here’s what we need to do for a healthier future

On the fourth anniversary of the pandemic, a public health researcher offers four principles for a healthier future.

John Gomez/Shutterstock

Anniversaries are usually festive occasions, marked by celebration and joy. But there’ll be no popping of corks for this one.

March 11 2024 marks four years since the World Health Organization (WHO) declared COVID-19 a pandemic.

Although no longer officially a public health emergency of international concern, the pandemic is still with us, and the virus is still causing serious harm.

Here are three priorities – three Cs – for a healthier future.

Clear guidance

Over the past four years, one of the biggest challenges people faced when trying to follow COVID rules was understanding them.

From a behavioural science perspective, one of the major themes of the last four years has been whether guidance was clear enough or whether people were receiving too many different and confusing messages – something colleagues and I called “alert fatigue”.

With colleagues, I conducted an evidence review of communication during COVID and found that the lack of clarity, as well as a lack of trust in those setting rules, were key barriers to adherence to measures like social distancing.

In future, whether it’s another COVID wave, or another virus or public health emergency, clear communication by trustworthy messengers is going to be key.

Combat complacency

As Maria van Kerkove, COVID technical lead for WHO, puts it there is no acceptable level of death from COVID. COVID complacency is setting in as we have moved out of the emergency phase of the pandemic. But is still much work to be done.

First, we still need to understand this virus better. Four years is not a long time to understand the longer-term effects of COVID. For example, evidence on how the virus affects the brain and cognitive functioning is in its infancy.

The extent, severity and possible treatment of long COVID is another priority that must not be forgotten – not least because it is still causing a lot of long-term sickness and absence.

Culture change

During the pandemic’s first few years, there was a question over how many of our new habits, from elbow bumping (remember that?) to remote working, were here to stay.

Turns out old habits die hard – and in most cases that’s not a bad thing – after all handshaking and hugging can be good for our health.

But there is some pandemic behaviour we could have kept, under certain conditions. I’m pretty sure most people don’t wear masks when they have respiratory symptoms, even though some health authorities, such as the NHS, recommend it.

Masks could still be thought of like umbrellas: we keep one handy for when we need it, for example, when visiting vulnerable people, especially during times when there’s a spike in COVID.

If masks hadn’t been so politicised as a symbol of conformity and oppression so early in the pandemic, then we might arguably have seen people in more countries adopting the behaviour in parts of east Asia, where people continue to wear masks or face coverings when they are sick to avoid spreading it to others.

Although the pandemic led to the growth of remote or hybrid working, presenteeism – going to work when sick – is still a major issue.

Encouraging parents to send children to school when they are unwell is unlikely to help public health, or attendance for that matter. For instance, although one child might recover quickly from a given virus, other children who might catch it from them might be ill for days.

Similarly, a culture of presenteeism that pressures workers to come in when ill is likely to backfire later on, helping infectious disease spread in workplaces.

At the most fundamental level, we need to do more to create a culture of equality. Some groups, especially the most economically deprived, fared much worse than others during the pandemic. Health inequalities have widened as a result. With ongoing pandemic impacts, for example, long COVID rates, also disproportionately affecting those from disadvantaged groups, health inequalities are likely to persist without significant action to address them.

Vaccine inequity is still a problem globally. At a national level, in some wealthier countries like the UK, those from more deprived backgrounds are going to be less able to afford private vaccines.

We may be out of the emergency phase of COVID, but the pandemic is not yet over. As we reflect on the past four years, working to provide clearer public health communication, avoiding COVID complacency and reducing health inequalities are all things that can help prepare for any future waves or, indeed, pandemics.

Simon Nicholas Williams has received funding from Senedd Cymru, Public Health Wales and the Wales Covid Evidence Centre for research on COVID-19, and has consulted for the World Health Organization. However, this article reflects the views of the author only, in his academic capacity at Swansea University, and no funding or organizational bodies were involved in the writing or content of this article.

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Chinese migration to US is nothing new – but the reasons for recent surge at Southern border are

A gloomier economic outlook in China and tightening state control have combined with the influence of social media in encouraging migration.

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Chinese migrants wait for a boat after having walked across the Darien Gap from Colombia to Panama. AP Photo/Natacha Pisarenko

The brief closure of the Darien Gap – a perilous 66-mile jungle journey linking South American and Central America – in February 2024 temporarily halted one of the Western Hemisphere’s busiest migration routes. It also highlighted its importance to a small but growing group of people that depend on that pass to make it to the U.S.: Chinese migrants.

While a record 2.5 million migrants were detained at the United States’ southwestern land border in 2023, only about 37,000 were from China.

I’m a scholar of migration and China. What I find most remarkable in these figures is the speed with which the number of Chinese migrants is growing. Nearly 10 times as many Chinese migrants crossed the southern border in 2023 as in 2022. In December 2023 alone, U.S. Border Patrol officials reported encounters with about 6,000 Chinese migrants, in contrast to the 900 they reported a year earlier in December 2022.

The dramatic uptick is the result of a confluence of factors that range from a slowing Chinese economy and tightening political control by President Xi Jinping to the easy access to online information on Chinese social media about how to make the trip.

Middle-class migrants

Journalists reporting from the border have generalized that Chinese migrants come largely from the self-employed middle class. They are not rich enough to use education or work opportunities as a means of entry, but they can afford to fly across the world.

According to a report from Reuters, in many cases those attempting to make the crossing are small-business owners who saw irreparable damage to their primary or sole source of income due to China’s “zero COVID” policies. The migrants are women, men and, in some cases, children accompanying parents from all over China.

Chinese nationals have long made the journey to the United States seeking economic opportunity or political freedom. Based on recent media interviews with migrants coming by way of South America and the U.S.’s southern border, the increase in numbers seems driven by two factors.

First, the most common path for immigration for Chinese nationals is through a student visa or H1-B visa for skilled workers. But travel restrictions during the early months of the pandemic temporarily stalled migration from China. Immigrant visas are out of reach for many Chinese nationals without family or vocation-based preferences, and tourist visas require a personal interview with a U.S. consulate to gauge the likelihood of the traveler returning to China.

Social media tutorials

Second, with the legal routes for immigration difficult to follow, social media accounts have outlined alternatives for Chinese who feel an urgent need to emigrate. Accounts on Douyin, the TikTok clone available in mainland China, document locations open for visa-free travel by Chinese passport holders. On TikTok itself, migrants could find information on where to cross the border, as well as information about transportation and smugglers, commonly known as “snakeheads,” who are experienced with bringing migrants on the journey north.

With virtual private networks, immigrants can also gather information from U.S. apps such as X, YouTube, Facebook and other sites that are otherwise blocked by Chinese censors.

Inspired by social media posts that both offer practical guides and celebrate the journey, thousands of Chinese migrants have been flying to Ecuador, which allows visa-free travel for Chinese citizens, and then making their way over land to the U.S.-Mexican border.

This journey involves trekking through the Darien Gap, which despite its notoriety as a dangerous crossing has become an increasingly common route for migrants from Venezuela, Colombia and all over the world.

In addition to information about crossing the Darien Gap, these social media posts highlight the best places to cross the border. This has led to a large share of Chinese asylum seekers following the same path to Mexico’s Baja California to cross the border near San Diego.

Chinese migration to US is nothing new

The rapid increase in numbers and the ease of accessing information via social media on their smartphones are new innovations. But there is a longer history of Chinese migration to the U.S. over the southern border – and at the hands of smugglers.

From 1882 to 1943, the United States banned all immigration by male Chinese laborers and most Chinese women. A combination of economic competition and racist concerns about Chinese culture and assimilability ensured that the Chinese would be the first ethnic group to enter the United States illegally.

With legal options for arrival eliminated, some Chinese migrants took advantage of the relative ease of movement between the U.S. and Mexico during those years. While some migrants adopted Mexican names and spoke enough Spanish to pass as migrant workers, others used borrowed identities or paperwork from Chinese people with a right of entry, like U.S.-born citizens. Similarly to what we are seeing today, it was middle- and working-class Chinese who more frequently turned to illegal means. Those with money and education were able to circumvent the law by arriving as students or members of the merchant class, both exceptions to the exclusion law.

Though these Chinese exclusion laws officially ended in 1943, restrictions on migration from Asia continued until Congress revised U.S. immigration law in the Hart-Celler Act in 1965. New priorities for immigrant visas that stressed vocational skills as well as family reunification, alongside then Chinese leader Deng Xiaoping’s policies of “reform and opening,” helped many Chinese migrants make their way legally to the U.S. in the 1980s and 1990s.

Even after the restrictive immigration laws ended, Chinese migrants without the education or family connections often needed for U.S. visas continued to take dangerous routes with the help of “snakeheads.”

One notorious incident occurred in 1993, when a ship called the Golden Venture ran aground near New York, resulting in the drowning deaths of 10 Chinese migrants and the arrest and conviction of the snakeheads attempting to smuggle hundreds of Chinese migrants into the United States.

Existing tensions

Though there is plenty of precedent for Chinese migrants arriving without documentation, Chinese asylum seekers have better odds of success than many of the other migrants making the dangerous journey north.

An estimated 55% of Chinese asylum seekers are successful in making their claims, often citing political oppression and lack of religious freedom in China as motivations. By contrast, only 29% of Venezuelans seeking asylum in the U.S. have their claim granted, and the number is even lower for Colombians, at 19%.

The new halt on the migratory highway from the south has affected thousands of new migrants seeking refuge in the U.S. But the mix of push factors from their home country and encouragement on social media means that Chinese migrants will continue to seek routes to America.

And with both migration and the perceived threat from China likely to be features of the upcoming U.S. election, there is a risk that increased Chinese migration could become politicized, leaning further into existing tensions between Washington and Beijing.

Meredith Oyen does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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