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Talking stocks, trading, and investing in general

lawyerdad

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Omega Male

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This has been the best week for the stock market since 1974. Don’t fight the Fed?
 

concealed

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Will the executives at my company see how I voted on the proxy form? If I down vote their comp will they find out and slap me? Or just laugh that my votes make any difference?
They won’t see. Also, even if “say on pay” fails, I don’t think they even have to change this years comp.
 

lawyerdad

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Wait, are we supposed to not like the host? Social investor guy is a million times more of a prick, imo.
Billionaires don’t always come across as likable but I happen to agree with this guy almost 100%. It’s not an easy call - the airlines aren’t super sympathetic but they are being forced to take a disproportionate hit here and pandemic where the federal government prohibits travel isn’t exactly a known risk factor for investors.

At the same time, the ramifications of failing to contain the virus early on are going to bankrupt thousands of good companies and their equity holders will all be wiped out. At the end of the day, the government is now in the “picking winners and losers” business.

I pretty much never listen to podcasts, but that guest recently outlined his view on investing in this market and I think it’s pretty interesting. He’s obviously a thoughtful guy and not just giving a hot take on CNBC. I don’t know him personally by the way.

EDIT: Scott Galloway wrote about this and provided this tidbit:

Since 2000, US airlines have declared bankruptcy 66 times. Despite the obvious vulnerability of the sector, boards/CEOs of the six largest airlines have spent 96% of their free cash flow on share buybacks, bolstering the share price and compensation of management … who now want a bailout. They should be allowed to fail. Bondholders will own the firms. Ships and planes will continue to float and fly, and there will still be a steel tube with recirculated air waiting for you post molestation by Roy from TSA.
 
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lawyerdad

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Billionaires don’t always come across as likable but I happen to agree with this guy almost 100%. It’s not an easy call - the airlines aren’t super sympathetic but they are being forced to take a disproportionate hit here and pandemic where the federal government prohibits travel isn’t exactly a known risk factor for investors.

At the same time, the ramifications of failing to contain the virus early on are going to bankrupt thousands of good companies and their equity holders will all be wiped out. At the end of the day, the government is now in the “picking winners and losers” business.

I pretty much never listen to podcasts, but that guest recently outlined his view on investing in this market and I think it’s pretty interesting. He’s obviously a thoughtful guy and not just giving a hot take on CNBC. I don’t know him personally by the way.
I don’t disagree with any of that, but the blithe “hey all those employees will be better off because they’ll just end up owning the company” is bullshit. The airlines didn’t exactly become employee-owned collectives as a result of the wave of bankruptcies in the first decade of the 2000’s.

At the very least, in a bankruptcy it’s quite common for collective bargaining agreements to be rejected and for the employees to be forced to take a shittier overall deal than what they had previously fought for and achieved. He also hedges - with good reason - on the “they’ll probably get to keep their retirement plan” point. That’s far from certain. If they have 401ks, they’re probably better positioned. If they have pensions that are funded in whole or in part by the airline, they could very well get hosed.


Also: fuck you, Jetblast!
 

venividivicibj

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I don’t disagree with any of that, but the blithe “hey all those employees will be better off because they’ll just end up owning the company” is bullshit. The airlines didn’t exactly become employee-owned collectives as a result of the wave of bankruptcies in the first decade of the 2000’s.

At the very least, in a bankruptcy it’s quite common for collective bargaining agreements to be rejected and for the employees to be forced to take a shittier overall deal than what they had previously fought for and achieved. He also hedges - with good reason - on the “they’ll probably get to keep their retirement plan” point. That’s far from certain. If they have 401ks, they’re probably better positioned. If they have pensions that are funded in whole or in part by the airline, they could very well get hosed.


Also: fuck you, Jetblast!
I think the point though, is that the employees were likely to be laid off/screwed anyway, and the bailout would not help a majority of them. The only people seeing a significant gain are the shareholders. And people act like the airlines would just poof disappear. No, the airplanes and fixed assets will just be rebadged under the new company that purchases it in BK.
 

UnFacconable

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I don’t disagree with any of that, but the blithe “hey all those employees will be better off because they’ll just end up owning the company” is bullshit. The airlines didn’t exactly become employee-owned collectives as a result of the wave of bankruptcies in the first decade of the 2000’s.

At the very least, in a bankruptcy it’s quite common for collective bargaining agreements to be rejected and for the employees to be forced to take a shittier overall deal than what they had previously fought for and achieved. He also hedges - with good reason - on the “they’ll probably get to keep their retirement plan” point. That’s far from certain. If they have 401ks, they’re probably better positioned. If they have pensions that are funded in whole or in part by the airline, they could very well get hosed.


Also: fuck you, Jetblast!
Yup, that part is far from certain and he glosses over what things will look like when the airlines exit bankruptcy. That's why I said "almost 100%".

The point Galloway (see my edit) makes is that we should focus our bailouts on protecting employees not equityholders. Also would concur with what VVV says above.
 

lawyerdad

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I think the point though, is that the employees were likely to be laid off/screwed anyway, and the bailout would not help a majority of them. The only people seeing a significant gain are the shareholders. And people act like the airlines would just poof disappear. No, the airplanes and fixed assets will just be rebadged under the new company that purchases it in BK.
That’s a fair point. If he articulated that, I missed it. I’m just saying that he and the interviewer are both smug douches, not that I’m certain his ultimate answer is the wrong one.
 

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