I do believe that investors need to be cognizant of the fact that what is happening today is not the norm with stock markets. Instead, I’d like to point out that the risk we are facing right now is what I call an event risk. This is something unforeseen that comes along every so often that has enormous economic impact, and in this case an impact on our health as well. However, the good news (if there even is such a thing) in these situations is that they are normally short-lived. Therefore, in the long-term scheme of things, event risks usually contain significant short-term risk but eventually enormous long-term opportunity.
Moreover, I think it’s also important to recognize that a crisis like we are currently facing, although affecting virtually every industry, affects some significantly more than others. In that vein, today I will be producing a video covering the major cruise lines. In follow-up videos I will be looking at restaurants and casinos to additional industries that are facing significant economic impacts.
Airlines, and anything associated with travel, represents another sector that is under stress. However, the airlines are potentially looking at a $50 billion bailout that could sustain them. But more importantly, I believe airlines are considered more essential than recreational businesses like cruise lines and/or restaurants.
Summary and Conclusions
From a pragmatic (realistic) point of view, it really boils down to this. If the cruise line industry survives this crisis, then we are witnessing an unprecedented buying opportunity. On the other hand, depending on the extent and duration of this crisis, these companies can also be facing potential bankruptcy. Therefore, prudent investors should recognize that investments in the cruise industry today are speculations. However, with great short-term risk can come great long-term returns. As a result, we have to essentially determine whether it would be courageous to invest or foolhardy. Caveat emptor!
FAST Graphs Analyze Out Loud Utilizing $CCL Carnival, $DIS Walt Disney, $RCL Royal Caribbean $NCLH Norwegian Cruise Line: