“A way to play the global economy decline is by shorting the airline industry. Here we turn to underground investor Martin Denholm, writing in today’s Smart Profits Report. The problem with the airline industry is that in business terms, it can be “lose-lose,” no matter what the economy is doing…” Contrarian Profits Reports. 

“When the economy is solid, demand rises and more people fly. But a rising economy also pushes up oil prices and offsets the airlines’ bottom line. Add to that the large number of carriers within the industry all fiercely competing and battling to win passengers, and that eats into profitability, too.” Contrarian Profits Reports.

“When the economy is struggling and the job market is poor, many people have less disposable income – and consequently fewer people want to fly. Here in Baltimore, for example, BWI Airport saw 7.5% fewer passengers in March, compared with March 2008. In addition to less demand, oil is a volatile resource, under threat from geopolitical shenanigans at any time.” Contrarian Profits Reports.

“Martin says an easy way to profit from airlines woes is to short the Claymore/NYSE Acra Airline ETF (NYSE:FAA). This relatively new ETF tracks highly capitalized and liquid US and international passenger airlines. FAA is down 12.6% since its recent May 6 high. And there could be plenty more pain on the horizon.” Contrarian Profits Reports.

ETF DAILY NEWS TAKE:  This ETF is less than 6 months old and trades on very low volume, so be careful.

Full Story: HERE

Related posts:

1. Why The Economics Of The Airline Industry Are Hopeless (FAA, AMR, SINGY, LUV, JBLU)
2. ETF Trade: Shorting Treasury Options; Profit, Rinse, Repeat
3. One of These Banks is Europe’s Lehman Bros.; And We’re Going to Profit From Its Collapse (SPY, TLT, TBT, FAS, FAZ)
4. Time To Buy The Airline ETFs? (FAA, FLYX, USO)
5. FLYX Permanently Grounded: Direxion Shuts Down Airline ETF (FAA, DAL, UAL, LUV, JBLU)

NYSE:FAA