Don't buy on quicksand. That has to be your mantra on days like today. Don't buy on quicksand because the people you are buying from are smarter than you are and most likely want to ring the register both before and after you are done buying.
Some things really sting in this business. One of them is the lost opportunity cost because you chose not to act or not to take a brave stance. Let's use the case of Boeing.
The other day the stock of Boeing (BA) was recommended by Goldman Sachs. At the time of the upgrade, we couldn't tell if the stock was at $110 or $90. Like in 1987 after the crash, stocks were trading with little or no true price discovery. A ten point increment sufficed.
It seemed at that moment like a totally harebrained upgrade. Why would you ever buy the stock of a company that can't make its most valuable plane, has Covid striking whatever assembly line that is still up, that had to suspend its dividend and can't find many new customers, or at least customers who can pay, with the exception of the Chinese.
To me bankruptcy was banging at the Boeing door.
And then some things started coming together. No, it wasn't Boeing that wanted $60 billion, it is Boeing plus the supply chain of 17,000 suppliers and two million workers. The suspect plane? Looks like a May approval for it, perhaps why the line is re-starting in May. The customers? There are plenty of orders. I get the feeling the Chinese will take them all.
Most importantly, the aid package, seemingly moribund that weekend, is taking shape and Boeing is protected.
The stock travels $50 in one 24-hour period. Instead of, call it $95, the stock is at $155.
And now you want in?
The light brigade survivors will be happy to sell to you.
But who wants to buy from you? Who wants to pay up 50% from yesterday to take you out of your position? You were brave. They are cowards.
Cowards don't win in this business.
Watch the stock of Boeing go to $175 without you. There was a moment in time when the investment had to be made. The darkest hour. Now that the sun is out, what edge do you have? Do you know of something no one else does?
There are hundreds of Boeings after moves like this. As there were in 1987. Sellers came out of the woodwork after the fierce rally. Register ringers abounded.
Cooler heads then figured out what really is going to have demand. Who really is going to be able to make numbers, or at least something like them.
Will Boeing be one of those companies?
I would suggest no.
Is the franchise intact?
And that's why it went from $95 to $155.
You have to find the next one that can do that.
This plane's left the runway already.