Can airlines soar higher?

airport-aircraft-departure-travelSouthwest (LUV) is near its all-time high. Yes, President Trump seems to be talking up more fiscal stimulus, but LUV is trading at 14-15x PE and has run up 45% in the last six months. The weird part is Warren Buffett who hates airlines as a business has made a big bet on the domestic airline sector. Should be interesting to see how things play out over the next 18 months.

Disclosure: long LEAP put options on LUV.



“Disconnect between financial markets and fundamentals”

Disconnect between financial markets and fundamentals, potential market volatility, financial vulnerabilities and policy uncertainties could, however, derail the modest recovery. The positive assessment reflected in market valuations appears disconnected from real economy prospects.  – OECD

“The fundamental flaw in the thinking of the conceited members of the National Assembly of France in 1790 was their mistaken idea that they could invent a money more suitable than gold to achieve the prosperity of France.”

– Hugo Salinas Price