It becomes self fulfilling pretty quickly.
I am talking about how all the airline and travel stocks get hurt off the President's ban on travel from a handful of nations to the United States.
Last week we heard from American Airlines (AAL) that there had been some price cutting in the overseas routes because of competition from the ultra-low-cost carriers. The call hammered the stock.
Today, it's getting crushed again -- this time because of a belief that business will definitely get crimped by the ban and that costs might go up, too. If it is up to American to filter its reservation system for people from these countries, then there's certainly some earnings downside. Plus, the potential for retaliation from other countries could hurt, too.
All that said, what happens if this is sorted out pretty quickly? What if this is the opening salvo and the amount of people affected is as small as the President's representatives say it is? What if the real issue for the confusion is the Delta Air Lines (DAL) outage, as President Trump says?
Then you would want to buy American. Or at least buy Southwest Airlines (LUV) , which is largely domestic and doesn't have these issues -- and just reported a great quarter.
I know it seems too soon to buy anything, but you have to think that perhaps you are being given a second opportunity to buy Southwest off an issue that will have no impact on its business.
That's what I think makes the most sense to do here.
If it gets to $50 that would seem to be the right thing to do.