Lockdown 2.0 Ones to Short

With COVID cases rising and restrictions on the increase, what are people’s thoughts on sectors which will be most affected? Will history repeat itself? Personally I can’t see a market crash being as bad second time around as we are more prepared.

However, I’ve a list of stocks to short lined up for when the winter flu season begins to hit and the negative news regarding restrictions and lockdown ramps up again. Mostly airlines and rental cars as these were heavily hit last time. I’m also thinking that cloud computing will be a safe space again.

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I would say anything air travel related. Several airlines in Europe are cancelling routes or reducing the number of flights.

Yes I agree. Airlines will definitely take another hit. We might see some going bankrupt this time round which wojld be fantastic from a shorting point of view. Im personally looking at American Airlines, Delta, and Southwest.

On my view, putting money on airlines is a weird move.
IF they survive, they will need many years to recover and earnings will grow very slow for many many years, plus all the loans and no dividends for a decade at least.

Don’t see bigger returns in 5 years that you can have with any other more solid company or probably on VUSA/QQQ, and the nature of the business might stay very volatile for much longer.

Which is exactly the reason to short them. Hopefully some don’t survive and you can ride down with them.

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Indeed… but they are already in a low range… so maybe other sectors that had a better recovery will drop more that the ones already on a bad situation.

I remember reading in an investing book saying that just because something is down substantially does not mean it is a dip. In extreme cases like airlines, there is always room to go down more. Although who knows really. You could be right.

Fast food chains are another one to watch in my eyes. People will begin working from home again which should dip the value of fast food chains

Don’t know if US airlines will be affected more than European ones. During 1st lockdown air traffic in Europe was almost 0 and in the US the kept flying. Thoughts?

I generally don’t trade European or UK stocks. I did see Ryanair was hit badly though a few months ago. They could be one to short.

You’re right, I heard also that US planes kept flying. Take a look at the weekly chart for US airlines though. I think we’re heading back to near March lows.

On the airline topic and on the bull side, passenger airlines are not looking good short term, however there is still a shortage in air freight because the passenger carriers are not not flying so there is less cargo capacity. So, air cargo companies should stay valuable

If I recall correctly its about 40% of world cargo usually flies in the hold of passenger flights.

@obrienciaran a lot of the US airlines stayed flying as a minimum requirement to get bailout money from the fed

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I watched something few days ago exactly saying about the demand grow for cargo flights for Lufthansa.

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I worked at a UK airport for over 33 years and I’ve seen many airlines come and go plus people losing their jobs, even some established airlines too.
As for freight on aircraft not all passenger airlines carry freight in the hold, the ones that do are usually the main ones like American, Delta, Singapore, Lufthansa, SAS, Air France and more.

Also remember some airlines also have shipping lines, so course the cruise types are out of the question, but there are plenty of cargo ships sailing to and fro, like the big container types and even oil tankers.

As already mentioned a lot of airlines have taken out loans to stay in business, so if and when they do manage to bounce back they will have to pay back those hefty loans thus affecting share and ticket prices.

Think also of the other companies that supply airlines at the airport, the handling agents, catering, security etc, those companies to are effected.

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Forgot to add, the fuel companies too, they can’t fly without that lol.

Col.

That’s bureaucracy at its finest. You have to use it to get funded; despite not demand!

I did get s tip on Reddit a few months ago about Deutsche Post. They own DHL. Fedex and UPS have being going from strength to strength during lockdown. Deutsche Post is one to go long on in my eyes.

My housemate also works for Logitech and she said they’re busier than ever due to restrictions. They’re branching out from keyboards/mice etc and going more into room booking systems, people management systems.

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I heard Lufthansa are burning through 1m per hour at the moment. Also my fellow Irishman Micheal O’Leary recently said Lufthansa are crack cocaine junkies. Thought it was funny.

Gyms could be interesting to short, like basic fit. They dropped quite some because France has closed gyms in certain infected areas. (I’m long, bought a dip earlier but I’m afraid it will be volatile this year)

If I would short, I would probably look what sectors and companies that got hit hard in around March, got back up, upto pre covid-19 so it has enough room to move. Airlines might not fit that.

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EZJ :neutral_face:

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I read not long ago of a company that was doing well selling table tennis tables and accessories during the lockdown, then after a few months they had to cancel the orders.
The reason was the company that made the tables closed down and laid the staff off because Covid19.