Panic at Orlando airport spoiled my golfing trip

Golf season in Canada can be very short because of bad weather. One of my guilty pleasures is heading south for an annual golf trip with the boys every November. We started this tradition sixteen years ago and I would have to be very ill to miss it.

As a volunteer driver, I experienced first-hand the panic at the Orlando airport while dropping off a friend after our last round of golf. We decided to go early so we could have   dinner together at the airport. Walking in, we faced a stampede of frighten travelers running and screaming to the exits.

Some travelers thought they heard gun fire while others thought that they heard an explosion. Standing outside watching the Orlando Police conduct their investigation with weapons drawn was very alarming.

It turns out that a camera battery exploded in a bag which cause people to panic and the airport to be evacuated. Thousands of travelers faced hours of waiting at security checkpoints.

Phil Brown, CEO of the Greater Orlando Aviation Authority, said a full ground-stop was issued at 5:30 p.m. and lasted until 9 p.m. At a press conference Friday night, Brown said 24 flights were canceled and 27 others were diverted. He acknowledged that some passengers will have to book new flights, and others might struggle to find hotel rooms for the night.

He added that some airport staff and TSA agents instructed the crowd to take cover, when the initial explosion created confusion among staff and passengers.

At first glance, it may seem that the Orlando Aviation Authority may have over reacted to a faulty camera battery. However, it happened on the same day that Americans celebrate veteran’s day.  Plus no one wants to read about children getting hurt after visiting Disney World.

I felt bad for my friend who ended up sleeping at the airport as his flight was cancelled and rescheduled for 2:30 p.m. the next day. I was lucky that my early morning flight was cancelled and I got some extra sleep. It made delays in my rescheduled flight a little more bearable.

Will this unfortunate incidence stop me from going south golfing? Not a chance, however I may decide to spend a few extra days driving instead of flying.

The moral of this story is managing risk extends beyond the financial markets. Panic and over reaction can easily cause a major sell off in stock markets. You can’t predict what will cause a stampede to the exits.

 

 

 

 

 

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Investing ideas: I liked the product so much, I bought the company

Victor K. Kiam made a fortune as the President and CEO of Remington Products which he famously purchased in 1979 after his wife bought him his first electric shaver. Kiam became famous as the spokesman for the Remington shaver. His catchphrase, “I liked the shaver so much, I bought the company”, it made him a household name.

Your iPhone is your BFF and you can’t function without a Starbucks latte. You post something on your Facebook page every day, go home from work and chill out by watching Netflix. They’re all products you love and know well.

But does that mean the companies behind them are good investments?

The short answer: At least it’s a good starting point.

At first glance, it isn’t a terrible idea to own stocks if you have a good understanding of a company’s products and have a good feeling it will be successful. Yet knowing whether a business makes a good product and has excellent customer service are by no means the only measurements for investing.

For example: Snapchat (SNAP) and Twitter (TWTR) are both very popular but can they become sustainable businesses with positive earnings growth? So far, it isn’t looking very good for either of these companies. Before you invest, you have to determine whether the product or service is just a new fad or a money-making long-term trend.

One of my best investment ideas in 2016 came from going on vacation on a cruise line. Talking to other passengers I got very positive feedback on their cruise line experiences. Plus many of my boomer friends confirmed that they also loved taking a vacation on a cruise line.  The baby boom generation is getting older and I had dinner with many passengers in their eighties and even with one women in her nineties. (This could be a long-term trend)

Although I was on vacation on a Carnival ship, I bought shares in Royal Caribbean after extensive research.

Price / Earnings Earnings growth (5yr) Operating margin
Royal Caribbean 17.7 times 16.45% 19.95%
Carnival 18.5 times 8.95% 16.63%

It turns out that I could have beaten the returns of the S&P 500 index by owning either RCL or CCL as illustrated by the chart below.

Finding good, long-term investments is exceedingly difficult, there are only a few good ideas out there. When you find an extraordinary business and you have an understanding of what its future looks like, you should invest some money into it. Unfortunately, going that takes time, effort and know-how, often more than casual investors will do on their own “but it can be done”.