Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
The reason the FTSE has fallen this morning is due to worries of Deutsche bank and the cost of insuring against default of the bank have surged, so it looks like the bank contagion is starting to spread. There is always now a crisis of some sort.
Unfortunately I think we will see IAG open sharply lower tomorrow based on the fed still continuing to raise rates and the BOE following. Lowering inflation should be the ultimate priority for all central banks and governments at the moment as they are the ones who have caused the majority of it.
This is painful to watch as nothing has materially changed specifically for the airline industry in the past week and in reality things has improved with lower oil prices and bond yields etc. Hopefully rationality will return but not holding my breadth.
It is ironic that financial statements are published for investors to read to evaluate and yet for the IAG share price you could just ignore them and following a simple EMA strategy and make money as short term momentum and sentiment is driving the price not the improving fundamentals of IAG.
I always remember learning about Brownian motions and normal probability distributions at university and that each event on a continuous probability distribution is independent of the past so the history of prices don't affect future prices. But for IAG, the share price is slightly correlated with the prior short term price history which is why it has significantly trended up and down and a backtest of a EMA stategy is significantly profitable over the past year. Unfortunately it means we should be short right now, but hopefully I am wrong!
Bobbins2 - Agreed. Not sure why the airlines got hit so hard today. I know IAG has a high Beta in relation to the FTSE 100 but the airlines industry fundamentals are not directly affected by the collapse of SVB.
Oil was down and bonds yields fell today both which should help with reducing IAGs costs going forward. In addition, the Fed is not likely not going to do the full 50 basis points hike at the next meeting. I can only hope this is a short term overreaction by markets.
With an average purchase price just below 140p , this has been a painful past 4 weeks seeing a 20%+ gain being almost wiped out and wishing I had sold at 170p but hopefully a valuable lesson learned to actually take profits. I think they need to update the old trading slogan of "Cut your losses short, but let your profits run" to "Cut your losses short and actually take profits".
I still think the fundamentals of IAG are strong with now lower average fuel costs now compared to majority of FY22, increasing passenger demand and average ticket prices, strong cash liquidity to meet interest costs and inflation reducing slowly but unfortunatley the sentiment is not with this stock and it may take some time before the sentiment returns.
LloydsActuary, I completely agree and sentiment is more of a factor driving prices than actual fundamentals at the moment given that Oil has come down from $120 a barrel, passenger demand is very high, no more front page news coverage of distruption at airports, BA cabin strikes have been somewhat averted and passenger load factors are increasing.
In a preverse way I hope we have a mild recession soon and get it done with to bring inflation down and hopefully help stocks.
I will probably get out tomorrow with whatever I can as average is 60p and so already massively down. Sadly, this is the end of the road for CINE, I can't see how they survive with the very high debt burden, high fixed costs, the UK govt obsession with lockdowns and studios going down the vod route. Growing up going to the cinema regularly, it will be strange to see a world where we have to watch all new releases on streaming services.
CINE was the first share I ever bought because of the massive 70%-80% drop and though it had got to recover but have learned a hard lesson that when shares drop significantly they have dropped for a reason and in only miracle situations do they ever recover. It seems that the best strategy during the pandemic was a momentum strategy to buys shares which were already in a strong uptrend and making new highs.