I (Brian here) wouldn't buy, recommend, or even research an airline stock. That's no knock on the almost universally congenial employees I've encountered over the years on AMR's (NYSE: AMR ) American Airlines, UAL's (Nasdaq: UAUA ) United Airlines, Southwest Airlines (NYSE: LUV ) , and so on.
Airline travel remains a technologically wondrous invention to me. When I hear people talk about how the Internet will forever change the world, revolutionize the way we communicate, yada, yada, I think of the real disruptive innovation of the past hundred years: flight. (Remember the last time you took a boat across the Atlantic? Yeah.)
But for the most part, airlines have made for poor long-term investments. Yes, I'm sure someone will make money betting on a turnaround at some of these companies. And yes, I'm sure there are some airline opportunities outside our shores that look attractive -- but I'm not biting.
To say it's a cutthroat industry may be an understatement -- competition is fierce. Commodity prices frequently ruin even the best-laid plans. (Think $50 to fill your car is a lot? Try filling up a 747!) Governmental regulation is a constant wild-card.
So as a consumer, airlines = good. As an investor … no, thanks.
I (Joe here) peg solar stocks as a whole offering a double helping of being shockingly overvalued and having questionable economics. Hey, at least airlines are cheap!
Don't get me wrong: Solar power is here to stay, and the race to grid parity has a finish line in the not-so-distant future. But who wins? Which technology wins? Is it a thin-film player like First Solar (Nasdaq: FSLR ) , a predominantly photovoltaic player like Suntech Power (NYSE: STP ) , or an offshoot of traditional PV production like Evergreen Solar (Nasdaq: ESLR ) and its ribbons? Who knows?
Not I. Or you, for that matter (nothing personal). Solar power, I love. But solar stocks? Fool, please: You'll burn yourself.
Joe has a point when it comes to solar stocks. Heck, I (Tim) said much of the same stuff months ago. But rather than begrudge Joe for not having an original idea, I'd thought I'd tell you about newspapers: a once proud industry that should now be put out to pasture.
It used to be that every city had a newspaper, and that newspaper had an information monopoly. As a result, everybody in the city subscribed, and so to reach those potential consumers, every business in the city advertised in that newspaper. It was a virtuous and profitable cycle for the paper, and it was the reason master investor Warren Buffett purchased both the Buffalo News (whole) and Washington Post (in part) for Berkshire Hathaway (NYSE: BRK-B ) .
But no longer. With the advent of the Internet, people in New York can read The San Francisco Examiner or The Shanghai Daily as easily as they can read The New York Times. Moreover, if you never liked The Times' editorial page, you can unsubscribe altogether and read blogs.
All of this is to say that advertisers can no longer rely on newspapers for audience, and so newspapers can no longer rely on advertisers for revenue. It's a dying model, one that many newspaper companies today are struggling to adapt to. And even newspapers with storied brands are in trouble, because the money today is not so much in producing content but in aggregating it.
Of course, there's a philosophical question about what happens when we all stop producing content and start aggregating it, but this is about investing ... so let's not go there.
Tim makes a good point about newspapers. So good, in fact, that I (Joe here) made it 15 months ago. But rather than begrudge Tim ... well, you know what, consider Tim begrudged.
Newspapers: the final word
Well, I can't blame Joe for that. He didn't even work here when I (Tim) wrote this three years ago. This is beginning to become a startling track record for an idea thief, wouldn't you agree?
Your thoughts here ...
What are the stocks or industries writ large that you would avoid at all possible costs? What about the ones you wouldn't wish on even your worst enemy? Chime in with your answers in the comments box below.