Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Topic Author
memic
Posts: 1
Joined: Thu Oct 10, 2019 3:00 pm

Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by memic » Thu Oct 10, 2019 8:09 pm

If a company has a bad PR crisis such as Boeing with the 737 max, is that a good time to invest after the stock dips. What are some good things to look at that may help predict if the stock will recover.

User avatar
LadyGeek
Site Admin
Posts: 58750
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: Buying after PR Chrisi [Public Relations Crisis (Boeing 737 Max)]

Post by LadyGeek » Thu Oct 10, 2019 9:30 pm

Welcome! As noted in our tag line "Investing Advice Inspired by Jack Bogle", we follow guidance by Jack Bogle, which is to use a long-term buy and hold approach by investing in the entire market using low-cost index funds. We don't invest in individual stocks.

Please see the wiki: Bogleheads® investment philosophy

Also: Getting started

May I recommend you post your portfolio info in this thread using the Asking Portfolio Questions format? It will make you think about the "big picture" while giving us the info we need to point you in the right direction.

If you have any questions, ask them here.

I retitled the thread for clarity.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

User avatar
jabberwockOG
Posts: 1856
Joined: Thu May 28, 2015 7:23 am

Re: Buying after PR Chrisi [Public Relations Crisis (Boeing 737 Max)]

Post by jabberwockOG » Thu Oct 10, 2019 10:10 pm

The problems at Boeing are deeper and far more systemic than the FCS issues on the 737Max. Successfully picking individual stocks is a crap-shoot at best.

terran
Posts: 1047
Joined: Sat Jan 10, 2015 10:50 pm

Re: Buying after PR Chrisi [Public Relations Crisis (Boeing 737 Max)]

Post by terran » Fri Oct 11, 2019 7:02 am

These things will be priced into the stock very quickly. For all you know someone already figured out the crisis was coming before it hit the major news outlets and it's already priced it. Beyond that, maybe the crisis signals larger problems at the company, or they're going to have lawsuits to payout, or, or, or... Basically, what makes you think the company is is undervalued? Maybe the professionals who live and breathe this stuff have priced the company perfectly given the current risks to the company and expected future income from the company.

NotWhoYouThink
Posts: 2804
Joined: Fri Dec 26, 2014 4:19 pm

Re: Buying after PR Chrisi [Public Relations Crisis (Boeing 737 Max)]

Post by NotWhoYouThink » Fri Oct 11, 2019 7:13 am

Recover???
If you exclude the brief excursion above $400 early this year Boeing has been trading near all time highs.

User avatar
nisiprius
Advisory Board
Posts: 39750
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: Buying after PR Chrisi [Public Relations Crisis (Boeing 737 Max)]

Post by nisiprius » Fri Oct 11, 2019 11:04 am

Anything that has been a major headline in the regular news... for months... is surely well-known to over 99% of all investors in Boeing. In deciding what they are willing to pay for Boeing stock, they, too, will be considering whether or not the public is overreacting, what effect the situation will have on Boeing's future earnings, how soon it will recover, and how many airlines will have bought Airbus A320s instead of waiting for Boeing to solve the problems with the 737 Max.

You are not the only person thinking that Boeing will recover. The price is the market's judgement that includes both the likelihood of lost earnings now and the likelihood of recovery later.

There can't be any simple rule that says the market is always overpessimistic after a PR crisis, and therefore are always undervalued and always a good buy. You are playing against hundreds of people who are all going through the process of thinking "he thinks I think he thinks I will play rock, so I think he thinks I will play scissors, so..."

[Comment on spelling removed by nisiprius]
Last edited by nisiprius on Fri Oct 11, 2019 5:33 pm, edited 1 time in total.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

User avatar
LadyGeek
Site Admin
Posts: 58750
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by LadyGeek » Fri Oct 11, 2019 11:35 am

^^^ I assume the spelling was just a typo. It's fixed - "Chrisi" to "Crisis".

memic - If you want to change the thread title further, just edit the Subject: line in Post #1. You can edit post with the "pencil" icon in the top-right corner of the post.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

User avatar
David Jay
Posts: 7501
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by David Jay » Fri Oct 11, 2019 12:23 pm

One of my very first posts on BH received this response (which I pass on for your contemplation):

What knowledge do you have that the market does not already know?
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

User avatar
whodidntante
Posts: 7115
Joined: Thu Jan 21, 2016 11:11 pm
Location: outside the echo chamber

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by whodidntante » Fri Oct 11, 2019 12:33 pm

Boeing is far from cheap. What is your thesis for why it will be higher soon?

DesertDiva
Posts: 697
Joined: Thu Mar 01, 2018 12:49 pm
Location: In the desert

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by DesertDiva » Fri Oct 11, 2019 12:45 pm

Generally, Bogleheads don't like the concepts of 1) market timing and 2) buying individual stocks. Follow the advice that LadyGeek provided (above) and start thinking of a long-term and holistic approach to investing.

Find a copy of "If You Can" by William Bernstein (you can find it for free online). Study it carefully in additional to other resources you will find on this site.

User avatar
LadyGeek
Site Admin
Posts: 58750
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by LadyGeek » Fri Oct 11, 2019 12:55 pm

^^^ Good idea. From the wiki: Books: recommendations and reviews

Direct link: If You Can: How Millennials Can Get Rich Slowly (free download)
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

finfire
Posts: 188
Joined: Tue Aug 14, 2018 1:52 pm

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by finfire » Fri Oct 11, 2019 12:59 pm

It's always a good time to invest like a Boglehead.

Jack FFR1846
Posts: 10803
Joined: Tue Dec 31, 2013 7:05 am
Location: 26 miles, 385 yards west of Copley Square

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by Jack FFR1846 » Fri Oct 11, 2019 1:12 pm

memic wrote:
Thu Oct 10, 2019 8:09 pm
If a company has a bad PR crisis such as Boeing with the 737 max, is that a good time to invest after the stock dips. What are some good things to look at that may help predict if the stock will recover.
So which bad PR are you talking about? The software problem that forced 2 airplanes to crash?

The revelation that mounting structures that hold wings on have been cracking?

Both?

Something else?

If you don't know these 2 issues, you are way behind the curve on Boeing. That should preclude you from doing anything with this single company stock.
Bogle: Smart Beta is stupid

StealthRabbit
Posts: 492
Joined: Sat Jun 13, 2009 1:25 am

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by StealthRabbit » Fri Oct 11, 2019 1:43 pm

Enticing as it may seem...

This thread / subject is a very good example of the 'unknown' downsides to PR crisis.

My 12 year old learned this with his first Roth investment... Federal Moog - a huge PR / price drop, to be followed much later by asbestos liability mitigation on a foreign acquisition.
Ouch, He went on to be more diligent and become a CFA and a CFO. (i.e. diligent analysis! can help, but will not Rescue)

It is what we DON'T know that can kill us.
(such as "Why is the computer flying this plane into the ground?")

then... Why did Boeing add a warning light ($80,000 option) that was not purchased by Asia carriers? (nor did it even work)
Hundred other 'Gotchas',

How much can you afford to lose on a single stock? (ALL is the right answer)
thus 0 - 5% is the max for 'play-money'. Review your 'gains' annually and eventually you will probably determine BH wins more constantly than you, definitely more consistently than public PR.

User avatar
1789
Posts: 622
Joined: Fri Aug 16, 2019 3:31 pm
Location: OR

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by 1789 » Fri Oct 11, 2019 3:16 pm

finfire wrote:
Fri Oct 11, 2019 12:59 pm
It's always a good time to invest like a Boglehead.
+1 , i also wouldnt recommend 5-10%. I recommend 0% individual stocks.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)

rj342
Posts: 653
Joined: Tue Apr 30, 2019 12:21 pm

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by rj342 » Fri Oct 11, 2019 3:42 pm

Its a lot more than just a mere "PR crisis" IOW, something looks bad (maybe appearing worse than it is).
It *is* bad. Not just product problems, but but org problems: policies and culture - including management culture.

Northern Flicker
Posts: 5064
Joined: Fri Apr 10, 2015 12:29 am

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by Northern Flicker » Fri Oct 11, 2019 10:13 pm

memic wrote:
Thu Oct 10, 2019 8:09 pm
If a company has a bad PR crisis such as Boeing with the 737 max, is that a good time to invest after the stock dips. What are some good things to look at that may help predict if the stock will recover.
There is never a good time to buy an individual stock because you believe it may overperform.

1. Whoever is selling the shares to you has the same information you do.

2. You take security-specific risk, which is the aggregate risk of things specific to that one company. A plane being discovered to have problems and being grounded would be such a risk for Boeing.

These risks can be diversified away by holding a diversified portfolio. Your return from a stock is the same whether or not you hold it in a diversified portfolio, so there is no additional compensation for taking this added risk.

If you hold a diversified portfolio like an index fund, the way to get compensated through extra expected return for taking more risk is either to increase your allocation percentage for stocks and/or implement a factor tilt.
Index fund investor since 1987.

Fallible
Posts: 7075
Joined: Fri Nov 27, 2009 4:44 pm
Contact:

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by Fallible » Sun Oct 13, 2019 5:49 pm

David Jay wrote:
Fri Oct 11, 2019 12:23 pm
One of my very first posts on BH received this response (which I pass on for your contemplation):

What knowledge do you have that the market does not already know?
And what the "market" doesn't yet know, it has the wherewithal to find out - in Boeing's case, current changes in top management and their impact on the Max.
John Bogle on his often bumpy road to low-cost indexing: "When a door closes, if you look long enough and hard enough, if you're strong enough, you'll find a window that opens."

User avatar
nedsaid
Posts: 12974
Joined: Fri Nov 23, 2012 12:33 pm

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by nedsaid » Sun Oct 13, 2019 5:54 pm

memic wrote:
Thu Oct 10, 2019 8:09 pm
If a company has a bad PR crisis such as Boeing with the 737 max, is that a good time to invest after the stock dips. What are some good things to look at that may help predict if the stock will recover.
I own the stock. I saw it dip when the public relations crisis started and it has since mostly recovered, particularly now that the 737 Max is still grounded. Keep in mind that the company is much more than commercial airliners, it is also an important military contractor. I have retained my stock. This is not a buy recommendation, not here to publish a stock newsletter. I see no reason to sell.

I would also say that most of the time, the big blue chip companies have the resources to work their way through their problems. I have also owned McDonald's stock for years, they have recovered from the death of something like three CEO's. Johnson & Johnson is another stock I own, they are having to weather the opioid crisis.
A fool and his money are good for business.

GaryA505
Posts: 341
Joined: Wed Feb 08, 2017 2:59 pm
Location: New Mexico

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by GaryA505 » Sun Oct 13, 2019 6:38 pm

Although I'm almost always a buy-and-hold investor and almost never buy individual stocks, I've been doing some short-term swing trading on BA and have made a little money since the second crash. This uses a small part of the cash in my overall portfolio. I believe there's a lot of irrational (i.e. emotional) selling of BA on bad news, so I set limit orders to buy small lots on dips and then set limit order to sell on the recovery from the dip. However, I think most of the good dips are in the past, unless there's another unexpected delay.

I also believe there will be a lot of irrational buying when the 737 MAX finally starts flying again, so I'd like to have a small position in it at that time. I haven't decided on a sell point yet.

To put the whole 737 MAX thing in perspective, you could read up on some similar problems that happened with other aircraft in the past. For just one example, the crash of a DC-10 in AA flight 191 remains the deadliest air crash in US aviation history, and resulted in the suspension of the DC-10's type cert and temporary grounding of all US-based DC-10s. Despite all this, the DC-10 (and it's successor the MD-11) went on to become very successful. It has happened before, and it will happen again.

Fallible
Posts: 7075
Joined: Fri Nov 27, 2009 4:44 pm
Contact:

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by Fallible » Sun Oct 13, 2019 10:02 pm

GaryA505 wrote:
Sun Oct 13, 2019 6:38 pm
...
To put the whole 737 MAX thing in perspective, you could read up on some similar problems that happened with other aircraft in the past. For just one example, the crash of a DC-10 in AA flight 191 remains the deadliest air crash in US aviation history, and resulted in the suspension of the DC-10's type cert and temporary grounding of all US-based DC-10s. Despite all this, the DC-10 (and it's successor the MD-11) went on to become very successful. It has happened before, and it will happen again.
I don't do individual stocks and agree with the advice to the OP posted here by LadyGeek and others. I'm just posting to say that I would not compare the American DC-10 crash to the two 737 Max crashes since the former was primarily caused by faulty AA maintenance, while the Max crashes apparently result from causes that reach deep into top Boeing management, resulting so far in replacement of its CEO as board chairman.
John Bogle on his often bumpy road to low-cost indexing: "When a door closes, if you look long enough and hard enough, if you're strong enough, you'll find a window that opens."

GaryA505
Posts: 341
Joined: Wed Feb 08, 2017 2:59 pm
Location: New Mexico

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by GaryA505 » Fri Oct 18, 2019 12:45 pm

It dipped again today, so I picked up some more. This is small money for me.

I only picked the DC-10 as one example. There are others.

People get emotional over disasters like this, so there is a lot of irrational selling. Doom and gloom.

GaryA505
Posts: 341
Joined: Wed Feb 08, 2017 2:59 pm
Location: New Mexico

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by GaryA505 » Fri Oct 18, 2019 2:00 pm

I predict the newly-disclosed instant messages between Boeing employees went something like this:

Employee1: "You know MCAS really should have gone back for redesign using two AOA sensors when we changed the stabilizer trim limits during testing".
Employee2: "Yes I know, but I told my manager that and he just ignored me".
Employee1: "Yup, same here. 2.5 degrees of nose down trim could be a disaster in the hands of poorly trained pilots."
Employee2: "Yes it could, especially considering the training that pilots are getting on this, which is a real joke".

hale2
Posts: 231
Joined: Sat Feb 15, 2014 5:54 pm

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by hale2 » Fri Oct 18, 2019 4:22 pm

GaryA505 wrote:
Sun Oct 13, 2019 6:38 pm
Although I'm almost always a buy-and-hold investor and almost never buy individual stocks, I've been doing some short-term swing trading on BA and have made a little money since the second crash. This uses a small part of the cash in my overall portfolio. I believe there's a lot of irrational (i.e. emotional) selling of BA on bad news, so I set limit orders to buy small lots on dips and then set limit order to sell on the recovery from the dip. However, I think most of the good dips are in the past, unless there's another unexpected delay.

I also believe there will be a lot of irrational buying when the 737 MAX finally starts flying again, so I'd like to have a small position in it at that time. I haven't decided on a sell point yet.

To put the whole 737 MAX thing in perspective, you could read up on some similar problems that happened with other aircraft in the past. For just one example, the crash of a DC-10 in AA flight 191 remains the deadliest air crash in US aviation history, and resulted in the suspension of the DC-10's type cert and temporary grounding of all US-based DC-10s. Despite all this, the DC-10 (and it's successor the MD-11) went on to become very successful. It has happened before, and it will happen again.
The difference is the DC-10 mishap was due to AA not following maintenance procedures but using a shortcut. The Max issue is a design issue that Boeing is still not being fully transparent to either the FAA or airline pilots.

GaryA505
Posts: 341
Joined: Wed Feb 08, 2017 2:59 pm
Location: New Mexico

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by GaryA505 » Fri Oct 18, 2019 4:59 pm

hale2 wrote:
Fri Oct 18, 2019 4:22 pm
GaryA505 wrote:
Sun Oct 13, 2019 6:38 pm
Although I'm almost always a buy-and-hold investor and almost never buy individual stocks, I've been doing some short-term swing trading on BA and have made a little money since the second crash. This uses a small part of the cash in my overall portfolio. I believe there's a lot of irrational (i.e. emotional) selling of BA on bad news, so I set limit orders to buy small lots on dips and then set limit order to sell on the recovery from the dip. However, I think most of the good dips are in the past, unless there's another unexpected delay.

I also believe there will be a lot of irrational buying when the 737 MAX finally starts flying again, so I'd like to have a small position in it at that time. I haven't decided on a sell point yet.

To put the whole 737 MAX thing in perspective, you could read up on some similar problems that happened with other aircraft in the past. For just one example, the crash of a DC-10 in AA flight 191 remains the deadliest air crash in US aviation history, and resulted in the suspension of the DC-10's type cert and temporary grounding of all US-based DC-10s. Despite all this, the DC-10 (and it's successor the MD-11) went on to become very successful. It has happened before, and it will happen again.
The difference is the DC-10 mishap was due to AA not following maintenance procedures but using a shortcut. The Max issue is a design issue that Boeing is still not being fully transparent to either the FAA or airline pilots.
The design issue is clear now. The process used to test and certify the aircraft was flawed. The FAA allowed Boeing to perform too much of the certification work themselves (the foxes were watching the chicken coop). When Boeing engineers found out they would need way more than 0.625 degrees of stab trim for the MCAS to work they way they wanted it to, they should have gone back and started over. However, that would have been a marketing/sales disaster because it would mean a redesign of the MCAS software to use two AOA sensors, a delay in deliveries, and probably some lost sales when the airlines found out that additional training would be required (beyond what Boeing had told them to get the sales). So, yeah this was a shortcut too, and they lost the bet.

There's no mystery here anymore. Boeing and the FAA just f-ed up, big time. The media likes to present theories that there is some fundamental design flaw in the 737 MAX itself because that sells. The truth about what actually happened is more complicated.

inbox788
Posts: 6697
Joined: Thu Mar 15, 2012 5:24 pm

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by inbox788 » Fri Oct 18, 2019 5:02 pm

GaryA505 wrote:
Fri Oct 18, 2019 2:00 pm
I predict the newly-disclosed instant messages between Boeing employees went something like this:

Employee1: "You know MCAS really should have gone back for redesign using two AOA sensors when we changed the stabilizer trim limits during testing".
Employee2: "Yes I know, but I told my manager that and he just ignored me".
Employee1: "Yup, same here. 2.5 degrees of nose down trim could be a disaster in the hands of poorly trained pilots."
Employee2: "Yes it could, especially considering the training that pilots are getting on this, which is a real joke".
That's one interpretation, but why not read it from the horse itself?

https://www.documentcloud.org/documents ... sages.html

BA stock went down 7% today based on the news. I read the above transcript, and my interpretation is that while informative and concerning, it's not that significant, and to me might be worth a 2% drop or even less, so depending on how you valued all the other factors, so I'd say it's a 5%+ discount today. Absent any new news, I expect the stock to recover by the end of next week. YMMV.

FWIW, my investments are mostly BH 3-fund and getting more so, and try to avoid individual stocks, so I've got no talking horse flying in this race.

https://www.youtube.com/watch?v=91LRPk8x14s

Helo80
Posts: 1164
Joined: Sat Apr 29, 2017 8:47 pm

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by Helo80 » Fri Oct 18, 2019 5:03 pm

To me, even if they fix all the issues, the 737 Max (and whatever name change it undergoes) is going to be forever damned.

GaryA505
Posts: 341
Joined: Wed Feb 08, 2017 2:59 pm
Location: New Mexico

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by GaryA505 » Fri Oct 18, 2019 5:12 pm

inbox788 wrote:
Fri Oct 18, 2019 5:02 pm
GaryA505 wrote:
Fri Oct 18, 2019 2:00 pm
I predict the newly-disclosed instant messages between Boeing employees went something like this:

Employee1: "You know MCAS really should have gone back for redesign using two AOA sensors when we changed the stabilizer trim limits during testing".
Employee2: "Yes I know, but I told my manager that and he just ignored me".
Employee1: "Yup, same here. 2.5 degrees of nose down trim could be a disaster in the hands of poorly trained pilots."
Employee2: "Yes it could, especially considering the training that pilots are getting on this, which is a real joke".
That's one interpretation, but why not read it from the horse itself?

https://www.documentcloud.org/documents ... sages.html

BA stock went down 7% today based on the news. I read the above transcript, and my interpretation is that while informative and concerning, it's not that significant, and to me might be worth a 2% drop or even less, so depending on how you valued all the other factors, so I'd say it's a 5%+ discount today. Absent any new news, I expect the stock to recover by the end of next week. YMMV.

FWIW, my investments are mostly BH 3-fund and getting more so, and try to avoid individual stocks, so I've got no talking horse flying in this race.

https://www.youtube.com/watch?v=91LRPk8x14s
Yeah, I was just speculating, but I wasn't too far off in that someone knew the MCAS design was wonky. Did they take this information to their managers? If so, what did the managers do with it? Was everyone so focused on getting the aircraft delivered that they just ignored it?

Fallible
Posts: 7075
Joined: Fri Nov 27, 2009 4:44 pm
Contact:

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by Fallible » Fri Oct 18, 2019 7:18 pm

If I did individual stocks, I'd now keep an eye on the new board chairman and watch for any other changes at the top to see how they go about correcting the problems. And I'd watch to see how Boeing will work with the FAA and how the FAA will strengthen/regain its regulatory role. And I hope I'd remember that the stock and industry analysts and other financial pros are the ones with the wherewithal to judge these things, which is why I don't do individual stocks.
John Bogle on his often bumpy road to low-cost indexing: "When a door closes, if you look long enough and hard enough, if you're strong enough, you'll find a window that opens."

arsenalfan
Posts: 782
Joined: Mon Dec 09, 2013 12:26 am

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by arsenalfan » Fri Oct 18, 2019 7:53 pm

I bought Boeing after the MCAS Crash. - 12 shares @ $372 on 3/15/19. Down 6.8% on it currently, we will see where we are 4/15/19.

What are your goals for invesing in single stocks?

This has been my fun money account strategy. Buy large, but in crisis, companies and hold for 1 year and see what’s left after LTCG tax hit.
It starts as a fun way to follow the news, and also a long term experiment to see if market over-reacts.
After a few days life intervenes and I forget I have the stocks.
Then I wait for one year LTCG and see what happened, usually sell.

I bought VW after dieselgate. That worked out well.
I bought Wells Fargo after their internal scandals, meh. Still sitting on that one.

Thusfar it’s yielded net 15-20% return. Nothing crazy, mostly because this account is less than 0.5% of my portfolio so not impactful.
Last edited by arsenalfan on Sat Oct 19, 2019 7:15 am, edited 1 time in total.

criticalmass
Posts: 1404
Joined: Wed Feb 12, 2014 10:58 pm

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by criticalmass » Fri Oct 18, 2019 9:42 pm

memic wrote:
Thu Oct 10, 2019 8:09 pm
If a company has a bad PR crisis such as Boeing with the 737 max, is that a good time to invest after the stock dips. What are some good things to look at that may help predict if the stock will recover.
When a company uses stolen competitor documents in a procurement competitions, that is a PR crisis. When a company offers a job to a government acquisition official in the middle of an acquisition negotiation in the scope of that official's capacity, that is a PR crisis. When a company artificially increases inflates the price by millions of taxpayer dollars of a decoy system the government is purchasing, that is a PR crisis. When the CEO of a company is forced to resign as a result of serious ethical lapses in a company, that is a PR crisis (and more).

When three hundred forty six human beings are killed violently due to a combination of an improperly certified aircraft, a faulty design, and potential serious pilot training lapses, that is not a "PR crisis." That is a human tragedy of unspeakable suffering and forever personal loss.

Boeing was a party in everything in the preceding two paragraphs.

Personally, I wouldn't be interested in trying to make an investment profit directly based on something that is a result of death and tragedy. The issues with the 737 MAX are by now well documented, although we learn more of the details regularly, including the recent text message disclosure. What more issues will come forward?

Although I am harsh with Boeing and its culture that allowed this plane to be built with a questionable design, there is plenty more blame to go around. The FAA's aviation safety branch and its subsidiary aircraft certification office did not adequately scrutinize the design. They were not even made aware of some key changes in the design (e.g. trim rate increase by MCAS from the original values). The Lion Air training and culture is questionable, at best---the entire airline has been banned from the USA for a decade--if they ever fly an aircraft that could physically reach the USA nonstop for a revenue flight. For much more information about systemic issues in Indonesian aviation including Lion Air, please read this excellent article https://www.nytimes.com/2019/09/18/maga ... ashes.html (Sept 2019).

It is very possible and likely that excellent aviator skills could have overcome a bad design, and just the general knowledge to disconnect the entire trim system (and thus MCAS) during uncommanded/runaway trim may well have prevented the crashes. Or if something bad happens after taking an action (raising flaps), then do the opposite (lower flaps--which would also disconnect MCAS).

I am less critical of Ethiopian as their accident happened at night, providing less clues to the poor pilots, and they also had less time. They also didn't have an aircraft with a known faulty air data sensor that was installed from a questionable after-market used parts supplier.)

With all that, is Boeing a good or bad investment? I don't know. Bogleheads will tell you to invest in the whole market, not a company. A company that has a questionable culture may have other really bad things that can come to light and affect the company negatively. On the other hand, Boeing is much larger than selling one aircraft model, or even selling aircraft. And they have limited competition, plus a market that recognizes the need to spread their purchases around to avoid damaging one company and thus major competition.

Personally, I don't think you will be able to "profit" on the tragedies and their aftermath, but I could be wrong.

criticalmass
Posts: 1404
Joined: Wed Feb 12, 2014 10:58 pm

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by criticalmass » Fri Oct 18, 2019 10:06 pm

GaryA505 wrote:
Sun Oct 13, 2019 6:38 pm
Although I'm almost always a buy-and-hold investor and almost never buy individual stocks, I've been doing some short-term swing trading on BA and have made a little money since the second crash. This uses a small part of the cash in my overall portfolio. I believe there's a lot of irrational (i.e. emotional) selling of BA on bad news, so I set limit orders to buy small lots on dips and then set limit order to sell on the recovery from the dip. However, I think most of the good dips are in the past, unless there's another unexpected delay.

I also believe there will be a lot of irrational buying when the 737 MAX finally starts flying again, so I'd like to have a small position in it at that time. I haven't decided on a sell point yet.

To put the whole 737 MAX thing in perspective, you could read up on some similar problems that happened with other aircraft in the past. For just one example, the crash of a DC-10 in AA flight 191 remains the deadliest air crash in US aviation history, and resulted in the suspension of the DC-10's type cert and temporary grounding of all US-based DC-10s. Despite all this, the DC-10 (and it's successor the MD-11) went on to become very successful. It has happened before, and it will happen again.
That depends on what you mean by successful. The DC-10 required major engineering changes after the 1979 tragedy and again after the 1989 tragedy. Douglas/McD sold a lot of airplanes, but the DC-10 almost bankrupted them for a while.

The MD-11 never came close to making its performance goals/promises, missing them by some eight percent. That's a huge number when the aircraft is purchased to make it 100% to its route destinations. Stability issues led to damaged hulls in hard landings. Nearly all of them were retired early from passenger service, and the Swiss Air tragedy didn't help. It has been a successful freighter. E.g. FedEx and others have been happy with the MD-11 used for hauling boxes around, but McD never sold anywhere near the amount of airframes they expected to. And it all became a moot point as ETOPS eventually killed the 3-4 engine market for most heavily traveled routes.

What will the 737 MAX future look like? Time will tell. If I were on Boeing's board, I would be authorizing something they should have done 10 years ago (and many argued for the same at that time): build a new 737 narrow body replacement aircraft with a new design. Get rid of the low fuselage design, the low clearance that causes issues for big high efficiency engines, and 50+ years of aerodynamic baggage. A common type rating with 777/787 would be a plus.

GaryA505
Posts: 341
Joined: Wed Feb 08, 2017 2:59 pm
Location: New Mexico

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by GaryA505 » Mon Oct 21, 2019 10:55 am

BA -4% to 330 at midday. It could go below $300 before this is over.

Valuethinker
Posts: 39238
Joined: Fri May 11, 2007 11:07 am

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by Valuethinker » Mon Oct 21, 2019 11:01 am

criticalmass wrote:
Fri Oct 18, 2019 9:42 pm
memic wrote:
Thu Oct 10, 2019 8:09 pm
If a company has a bad PR crisis such as Boeing with the 737 max, is that a good time to invest after the stock dips. What are some good things to look at that may help predict if the stock will recover.
When a company uses stolen competitor documents in a procurement competitions, that is a PR crisis. When a company offers a job to a government acquisition official in the middle of an acquisition negotiation in the scope of that official's capacity, that is a PR crisis. When a company artificially increases inflates the price by millions of taxpayer dollars of a decoy system the government is purchasing, that is a PR crisis. When the CEO of a company is forced to resign as a result of serious ethical lapses in a company, that is a PR crisis (and more).

When three hundred forty six human beings are killed violently due to a combination of an improperly certified aircraft, a faulty design, and potential serious pilot training lapses, that is not a "PR crisis." That is a human tragedy of unspeakable suffering and forever personal loss.

Boeing was a party in everything in the preceding two paragraphs.

Personally, I wouldn't be interested in trying to make an investment profit directly based on something that is a result of death and tragedy. The issues with the 737 MAX are by now well documented, although we learn more of the details regularly, including the recent text message disclosure. What more issues will come forward?

Although I am harsh with Boeing and its culture that allowed this plane to be built with a questionable design, there is plenty more blame to go around. The FAA's aviation safety branch and its subsidiary aircraft certification office did not adequately scrutinize the design. They were not even made aware of some key changes in the design (e.g. trim rate increase by MCAS from the original values). The Lion Air training and culture is questionable, at best---the entire airline has been banned from the USA for a decade--if they ever fly an aircraft that could physically reach the USA nonstop for a revenue flight. For much more information about systemic issues in Indonesian aviation including Lion Air, please read this excellent article https://www.nytimes.com/2019/09/18/maga ... ashes.html (Sept 2019).

It is very possible and likely that excellent aviator skills could have overcome a bad design, and just the general knowledge to disconnect the entire trim system (and thus MCAS) during uncommanded/runaway trim may well have prevented the crashes. Or if something bad happens after taking an action (raising flaps), then do the opposite (lower flaps--which would also disconnect MCAS).

I am less critical of Ethiopian as their accident happened at night, providing less clues to the poor pilots, and they also had less time. They also didn't have an aircraft with a known faulty air data sensor that was installed from a questionable after-market used parts supplier.)

With all that, is Boeing a good or bad investment? I don't know. Bogleheads will tell you to invest in the whole market, not a company. A company that has a questionable culture may have other really bad things that can come to light and affect the company negatively. On the other hand, Boeing is much larger than selling one aircraft model, or even selling aircraft. And they have limited competition, plus a market that recognizes the need to spread their purchases around to avoid damaging one company and thus major competition.

Personally, I don't think you will be able to "profit" on the tragedies and their aftermath, but I could be wrong.
Whoosh. Thank you for that.

You write like William Langewische, with that kind of knowledge and controlled outrage. That is meant to be praise.

"Fly by Wire" as well as his Atlantic piece about the crash of Valu jet in the Florida Everglades are 2 of my favourite pieces of reportage of all time.

User avatar
1789
Posts: 622
Joined: Fri Aug 16, 2019 3:31 pm
Location: OR

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by 1789 » Mon Oct 21, 2019 11:56 am

Why worrying about BA or any other particular company. One day it gan go down 5% and next day it can go up 10%. This is the instability and risk involved with individual stocks. I would not hold any individual stocks and would rather have a peace of mind by holding broad market index funds. I guarantee you would be much happier this way.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)

GaryA505
Posts: 341
Joined: Wed Feb 08, 2017 2:59 pm
Location: New Mexico

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by GaryA505 » Mon Oct 21, 2019 12:08 pm

1789 wrote:
Mon Oct 21, 2019 11:56 am
Why worrying about BA or any other particular company. One day it gan go down 5% and next day it can go up 10%. This is the instability and risk involved with individual stocks. I would not hold any individual stocks and would rather have a peace of mind by holding broad market index funds. I guarantee you would be much happier this way.
I believe that most of us who are doing this are using very small parts of our overall portfolios. For me it's less than 1% of my assets, and I've made some money on very small trades of BA. Some people call this "skimming". I know, it's not the Boglehead way, but there's lots of stuff on this forum that isn't Boglehead.

User avatar
firebirdparts
Posts: 505
Joined: Thu Jun 13, 2019 4:21 pm

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by firebirdparts » Mon Oct 21, 2019 12:45 pm

It's just gambling. When you think it's not gambling, then yeah, you need to stop.

What makes this interesting is when you see a looming event that will dictate a stock snap to two possible futures. A great foreseeable example of that is Ford motor company stock at $2 a share in 2009. If you're not insane, you already should know it must change to either $10 or $0 (bankruptcy is binary), and that yank is only a few months away. The people buying and selling the stock should all be taking into account their belief about the odds, and you should too.

I don't invest in individual stocks, but it would be a certain amount of fun.
A fool and your money are soon partners

GaryA505
Posts: 341
Joined: Wed Feb 08, 2017 2:59 pm
Location: New Mexico

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by GaryA505 » Mon Oct 21, 2019 12:52 pm

firebirdparts wrote:
Mon Oct 21, 2019 12:45 pm
It's just gambling. When you think it's not gambling, then yeah, you need to stop.

What makes this interesting is when you see a looming event that will dictate a stock snap to two possible futures. A great foreseeable example of that is Ford motor company stock at $2 a share in 2009. If you're not insane, you already should know it must change to either $10 or $0, and that yank is only a few months away. The people buying and selling the stock should all be taking into account their belief about the odds, and you should too.

I don't invest in individual stocks, but it would be a certain amount of fun.
Yes, it's gambling but the odds are probably better than Las Vegas, and I don't wager that much. :D

Now that you mention it, investing in anything is gambling. Everything has risk.

User avatar
nisiprius
Advisory Board
Posts: 39750
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by nisiprius » Mon Oct 21, 2019 12:55 pm

Helo80 wrote:
Fri Oct 18, 2019 5:03 pm
To me, even if they fix all the issues, the 737 Max (and whatever name change it undergoes) is going to be forever damned.
A name change will probably work. Do you remember the horrible ValuJet crash, which--to make a long story short--was caused by the airline management's carelessness with regard to maintenance and safety? Within a few years of the crash, my daughter-in-law was telling me that she was flying to Florida on Airtran. I said "But... but... but... that's ValuJet." She was unaware that it was the same airline... and didn't much care. It went to the right place at the right time for the right price.

To put it another way: 1) Do you check the equipment when booking a flight? 2) How often have you gotten to the airport and found that it was actually a different model of airliner and canceled your flight because it wasn't what you had expected?
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

Helo80
Posts: 1164
Joined: Sat Apr 29, 2017 8:47 pm

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by Helo80 » Mon Oct 21, 2019 1:35 pm

nisiprius wrote:
Mon Oct 21, 2019 12:55 pm
Helo80 wrote:
Fri Oct 18, 2019 5:03 pm
To me, even if they fix all the issues, the 737 Max (and whatever name change it undergoes) is going to be forever damned.
A name change will probably work. Do you remember the horrible ValuJet crash, which--to make a long story short--was caused by the airline management's carelessness with regard to maintenance and safety? Within a few years of the crash, my daughter-in-law was telling me that she was flying to Florida on Airtran. I said "But... but... but... that's ValuJet." She was unaware that it was the same airline... and didn't much care. It went to the right place at the right time for the right price.

To put it another way: 1) Do you check the equipment when booking a flight? 2) How often have you gotten to the airport and found that it was actually a different model of airliner and canceled your flight because it wasn't what you had expected?


Good points --- and no, I don't actually know what model airplane I was flying until this incident.

skime
Posts: 135
Joined: Fri Nov 10, 2017 6:24 pm

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by skime » Mon Oct 21, 2019 1:56 pm

memic wrote:
Thu Oct 10, 2019 8:09 pm
If a company has a bad PR crisis such as Boeing with the 737 max, is that a good time to invest after the stock dips. What are some good things to look at that may help predict if the stock will recover.
It's looking like Boeing purposefully hid information that ended up killing hundreds of people. Do you really want to provide capital to a company that would do that?

The families of those people will never be the same. In the meantime, the c-suite and board will walk away.

GaryA505
Posts: 341
Joined: Wed Feb 08, 2017 2:59 pm
Location: New Mexico

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by GaryA505 » Mon Oct 21, 2019 2:23 pm

skime wrote:
Mon Oct 21, 2019 1:56 pm
memic wrote:
Thu Oct 10, 2019 8:09 pm
If a company has a bad PR crisis such as Boeing with the 737 max, is that a good time to invest after the stock dips. What are some good things to look at that may help predict if the stock will recover.
It's looking like Boeing purposefully hid information that ended up killing hundreds of people. Do you really want to provide capital to a company that would do that?

The families of those people will never be the same. In the meantime, the c-suite and board will walk away.
Good point. You should probably check any stock funds that own Boeing stock (BA) and sell them immediately! When you get done with that, you should probably sell any funds that hold stock in Boeing suppliers and subcontractors.

skime
Posts: 135
Joined: Fri Nov 10, 2017 6:24 pm

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by skime » Mon Oct 21, 2019 2:43 pm

GaryA505 wrote:
Mon Oct 21, 2019 2:23 pm
skime wrote:
Mon Oct 21, 2019 1:56 pm
memic wrote:
Thu Oct 10, 2019 8:09 pm
If a company has a bad PR crisis such as Boeing with the 737 max, is that a good time to invest after the stock dips. What are some good things to look at that may help predict if the stock will recover.
It's looking like Boeing purposefully hid information that ended up killing hundreds of people. Do you really want to provide capital to a company that would do that?

The families of those people will never be the same. In the meantime, the c-suite and board will walk away.
Good point. You should probably check any stock funds that own Boeing stock (BA) and sell them immediately! When you get done with that, you should probably sell any funds that hold stock in Boeing suppliers and subcontractors.
Easy to say if it's not your family.

Fallible
Posts: 7075
Joined: Fri Nov 27, 2009 4:44 pm
Contact:

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by Fallible » Mon Oct 21, 2019 5:32 pm

Valuethinker wrote:
Mon Oct 21, 2019 11:01 am
...
You write like William Langewische, with that kind of knowledge and controlled outrage. That is meant to be praise. ...
"Controlled outrage" describes Langwiesche well, and it stems I think from his passion for flying, for getting it right, and owning up when it's done wrong. He is all flyer, but also top journalist when he brings perspective and key facts to his outstanding reporting. I wonder if he might write more on Boeing when the investigation is complete; or possibly another outstanding journalist, James Surowiecki, who has written about Boeing before. Whatever, anyone considering Boeing stock would do well to read such work.
Last edited by Fallible on Sat Oct 26, 2019 12:37 am, edited 1 time in total.
John Bogle on his often bumpy road to low-cost indexing: "When a door closes, if you look long enough and hard enough, if you're strong enough, you'll find a window that opens."

jibantik
Posts: 224
Joined: Fri Nov 24, 2017 1:05 pm

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by jibantik » Mon Oct 21, 2019 7:45 pm

David Jay wrote:
Fri Oct 11, 2019 12:23 pm
One of my very first posts on BH received this response (which I pass on for your contemplation):

What knowledge do you have that the market does not already know?
+1.

Now say that 5 times and repeat it to everyone on here who refuses to invest in international.

tigerdoc93
Posts: 192
Joined: Wed Oct 07, 2015 8:50 pm

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by tigerdoc93 » Mon Oct 21, 2019 8:26 pm

I have no special knowledge but common sense told me to short Boeing after the 2 crashes. Unfortunately I’m too scared to short stocks so I missed out. With all the negative press, the fact that the 737 max is still grounded, the inflammatory text messages from a test pilot, the cutting of corners, outsourcing engineering, etc.I believe the stock is headed much lower. But I’m not acting on this belief. Time will tell.

User avatar
anon_investor
Posts: 766
Joined: Mon Jun 03, 2019 1:43 pm

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by anon_investor » Mon Oct 21, 2019 8:37 pm

Apparently VTSAX/VTI is one of the largest shareholders of Boeing...

GaryA505
Posts: 341
Joined: Wed Feb 08, 2017 2:59 pm
Location: New Mexico

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by GaryA505 » Mon Oct 21, 2019 10:16 pm

The market doesn't know:
1. When the 737 MAX will fly again.
2. If the 737 Max will fly again.
3. How long it will take Boeing to recover from this mess.
4. How much it will cost Boeing to fix this mess.

There are some things we know:
1. The 737 Max started flying commercially about two years ago (and some of the people who say they'll never fly on one already have).
2. In it's first year of service, the 737 Max flew something like 40000 flights for over 100,000 hours, and carried over 6 million passengers.
3. Boeing has something like 5000 orders for the 737 Max, and they cost around $120M each.

Just something to think about ...

Valuethinker
Posts: 39238
Joined: Fri May 11, 2007 11:07 am

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by Valuethinker » Tue Oct 22, 2019 7:14 am

anon_investor wrote:
Mon Oct 21, 2019 8:37 pm
Apparently VTSAX/VTI is one of the largest shareholders of Boeing...
As it would be of any listed US company.

I believe it is the largest US mutual fund?

pyld76
Posts: 280
Joined: Thu Feb 09, 2012 4:15 pm

Re: Buying after PR Crisis [Public Relations Crisis (Boeing 737 Max)]

Post by pyld76 » Tue Oct 22, 2019 7:20 am

I thought briefly about this right after the second crash happened and BA tanked--is this really a slam-dunk case of buying something on sale because (long term) people are reactionary and don't know any better? It then occurred to me that I don't know what I don't know about what else might come out, nor what, nor when. DIdn't take action.

So, with regard to the OP: if you are sure/right that the "crisis" has passed? Go nuts. If you end up being wrong, you are catching a falling knife. Or, I'm not sure it isn't market timing in anything but name.

Post Reply