I’ve long been an admirer of Southwest Airlines (LUV). Any company that can consistently turn a profit in an industry that is very difficult to make money in has got to be one of the best managed companies on the planet. Yesterday, they amazed me again. They reported that they tripled their earnings.
A key to their success is that they successfully hedged their fuel prices. In other words, they bought futures and forwards, locking in lower prices before prices stated to rise. I don’t want to know what the commercials in general are doing in oil futures, I just wish there was a way I could find out what Southwest is doing. I have never been able to figure out why other airlines just don’t copy some of the things Southwest has been doing for years.
On an unrelated note, I’m amazed at what a lot of analysts are saying this morning about the stock market. It goes something like this -- the breakdown of the indices is actually bullish for the stock market because it will wash out weak longs and now the market can go up.
Say what? A technical breakdown in the market is bullish? No, I’m sorry but a breakdown is bearish. I guess by the same logic, new highs would be bearish because it would attract sellers. Sheesh…some of these people really try to over think this thing.
We very well may rally from these oversold levels, but it won’t be because a bearish technical picture is actually bullish.
Larry
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