Wednesday, May 18, 2005


With the Dow down 4% and the NASDAQ down 8% on the year, it is a blessing to be hitting net new highs. Simple extrapolation projects that by the time the Dow is even on the year, my most aggressive account should be up 4%, 8% or even 12% on the year.

The key reason; the nerve to buy the airline stocks during the worst of the down draft. Today, the airline index is up 5.54%! In recent days, JP Morgan and other firms have up-graded several of the legacy carriers. UAL recently won the right to turn the pension plan over to the PBGC. UAL just lopped off something like $3 Billion of liabilities. USAir and America West continue their merger talks. Most importantly, load factors are very strong for most airlines.

When Delta dropped fares, the public responded. The business is booming but profits are a long way off for Delta. The company is not generating the cash to continue. There is the risk of bankruptcy. The employees at Delta know that they must accept similar pay and benefit cuts or they will put the carrier out of business.

Delta and NWAC are two of the carriers that have been up-graded by JP Morgan. My family has purchased shares in each of them since the up-grade.

NET NEW HIGHS! What a wonderful concept. Buy the Big Bull Before The Frog Boils!