Passengers Hate Airlines...Unless They Invest in Them
United Airlines is in the news for beating up a passenger, American Airlines is in the news for being rude to a mother with a baby, Delta is in the news for yelling at a passenger for giving their baby a seat...blah blah blah. Since the creation of airlines, passengers have been complaining about this and that. It's just a lot more apparent nowadays since every passenger has cell phone to immortalize the ridiculous, brutal, and rude actions of airlines. But you know which passengers AREN'T complaining?
The ones who own stocks in airlines. In particular, the BEST airlines.
In an age where the energy sector has massively under-performed the market at a time when indexes have reached all-time highs, many investors have found a ball of economic prowess in the airline sector. Airlines have thrived on ancillary fees, and while passengers may grumble, stockholders have been rolling in dough.
Despite all of the "controversies" at every major airline in recent years, there is no doubt that airlines have been on a tear since the stock market began to recover at the end of the recession. In fact, since 2012, the airline sector has far surpassed the performance of the S&P 1500 composite index. See the chart below for a great demonstration of the divergence in performance.
What is the lesson of the day? Look at the performance and longevity of the stock sector before deciding if a controversy in the news is enough to shatter the industry. If the CEO of Exxon Mobil saved a puppy on the freeway, it still won't make the price of oil improve or make oil burning less dirty -- but it's a story that will make everyone "feel good." In the grand scheme of things, hyperbolic news stories won't be enough to crash stock sectors and cause folks to lose money. I'll just be here happily putting up with airlines for a nice gain in my retirement savings. :)