# American Airlines (AAL)



## james4beach (Nov 15, 2012)

What do people think of this?

I bought some, because the Federal Reserve has flooded the market with liquidity which has sparked a speculative mania. This morning I saw that AAL is up huge pre-market. So I'm thinking that the flood of stupid-money might be about to rush into AAL.

Only 34% of the float is short, but I'm wondering if those holding short might be extremely nervous due to other massive short-covering rallies. They may be willing to cover sooner than they normally would.

I bought 25 shares @ 21.59


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## MrMatt (Dec 21, 2011)

james4beach said:


> What do people think of this?


I think you're playing silly market psychology games.

Betting on the "bigger fool" is a bad idea.


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## james4beach (Nov 15, 2012)

American Airlines surges despite record annual loss as short sellers get squeezed


American Airlines is the most-shorted U.S. airline.




www.cnbc.com





Just reported earnings, better than expected.

I should be very clear here: this is a total gamble, for entertainment. I made the position so small that it doesn't even register in my asset allocation.

Look at me, reading news headlines and buying stock! Maybe next I'll tune into Mad Money and sign up for a Motley Fool newsletter.


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## peterk (May 16, 2010)

I think the concept of "pumping stocks" is just another psychological ploy by our money rulers to make it seem like "the little people" have some sort of influence in the world when we don't. As long as there's some appearance that the systems that run the world (money and politics) are a bit chaotic and uncontrolled, people will be able to satisfy themselves with the thought that they are not indentured servants who are utterly helpless.

Oh noes - please redditers, don't overpower us, it's too much, we can't take it! lol. Crush.


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## agent99 (Sep 11, 2013)

james4beach said:


> What do people think of this?
> I bought 25 shares @ 21.59


So far doesn't look too good. I didn't think you were a gambler. Gold/GIC/bonds not exciting enough?


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## MrBlackhill (Jun 10, 2020)

Why the recent gambling @james4beach ?

That was an instant loss of -20% and you won't see your money until next year maybe.

GME was a unique situation. I thought you've read enough about the GME context to understand that it won't happen to BB, AMC, EXPR, etc. It's too late. And certainly not AAL.

The shorts % on those stocks is nowhere near GME and all its orchestration.


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## doctrine (Sep 30, 2011)

The reddit group has a lot of clout but they don't have enough capital or coordination to manipulate more than a handful of stocks. At least if you're stuck with AAL, there is the possibility of it moving higher eventually in a few years given it was a $40-50 stock pre-COVID.


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## agent99 (Sep 11, 2013)

Not a good day for American Airlines or Bombardier: Over 200 flights on American Airlines' regional carrier canceled after temporary FAA grounding


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## james4beach (Nov 15, 2012)

MrBlackhill said:


> Why the recent gambling @james4beach ?


Well it's a gamble, just like my purchase of Bitcoin. A gamble means it's a pretty wild guess, mostly for entertainment, with very little expectation of a win. Most of the value to me comes from the entertainment/story.

I described the motivation in my first post: "because the Federal Reserve has flooded the market with liquidity which has sparked a speculative mania..."

I looked for something which might start moving like crazy, to front-run the herd, but which I could also see myself holding because it's still a legit stock. This is obviously a risky proposition because AAL isn't being discussed on TikTok or Robinhood so it's very much a _speculation on a speculation_. But the intense volume over the last 24 hours certainly shows that there is activity happening in it.

The idea was to find something which is making early movements which has a _chance_ of turning into a massive rally. It may or may not of course. I still think there is a reasonable possibility of this heavily beaten up stock rallying, in the current "flood of liquidity" environment. I don't really care what Reddit people do; I think they're a sideshow.

Moved details of my gambling portfolio to: Gambling portfolios


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## peterk (May 16, 2010)

Looks like you got lucky James - I don't see a single trade today above $21.59 on AAL... It's all you! 

Oh well. Maybe next time.


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## james4beach (Nov 15, 2012)

peterk said:


> Looks like you got lucky James - I don't see a single trade today above $21.59 on AAL... It's all you!


That's the nature of gambling. Plus, I bought in premarket where the price went much higher, well over $22.

The chart on AAL still looks pretty good, will be interesting to see how this unfolds in the coming weeks/months. The short-covering might only be starting, especially if brokers start forcing shorts to cover (this process usually takes a few days).

One should not confuse gambling with investing/speculating. I'm speculating on a certain sequence of things happening. As I said above, I expect to lose. YOLO!!


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## MrBlackhill (Jun 10, 2020)

MrBlackhill said:


> GME was a unique situation.


Unique was not the right word. Well... it was unique in the way it was orchestrated, but it happened in the past.









How The GameStop Pop Compares To Tilray, Volkswagen, Other Historical Short Squeezes - GameStop (NYSE:GME)


Video game retailer GameStop Corp. (NYSE: GME) is getting a lot of attention so far in 2021 for its dramatic short squeeze that has sent shares soaring from a 52-week low of $2.57 to as high as $483 Thursday morning.




www.benzinga.com


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## james4beach (Nov 15, 2012)

It seems that my $539 helped to bail out American Airlines, according to Bloomberg:



> American Airlines revealed plans on Friday to sell as much as $1.1 billion of stock through what is known as an at-the-market program, which allows companies to issue additional shares at market prices. The announcement came after their stock was up as much as 38% at its peak last week.


The new equity will provide vital liquidity to the company to help it survive.

If you read my reasoning in the opening post, this is actually kind of interesting. It really does seem that central bank money has found its way to distressed companies, albeit through a chaotic process.

Maybe troubled companies should use social media to "beg" for assistance from gamblers?


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## james4beach (Nov 15, 2012)

AAL is up 11% today as the whole sector is upgraded by one analyst. Just about all airline stocks are up strongly today, but AAL is up the most.

The AAL chart looks pretty great since December. I am committed to holding this position for at least one year.


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## james4beach (Nov 15, 2012)

peterk said:


> Oh well. Maybe next time.


Not a lot of patience from some of you here. I'm now up 16%

AAL is really moving now. More importantly it looks like a good trend is in progress, with a great looking chart. Many fundamentals are moving in their favour, especially with Biden's very strong vaccine rollout and air travel on its way to returning to normal.


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## MrBlackhill (Jun 10, 2020)

james4beach said:


> Not a lot of patience from some of you here. I'm now up 16%


It was not about patience, but the fact that your entry point was on a spike, which is a huge gamble as probabilities are usually against you. I made this mistake once and would never do it again. In fact, you've been impatient buying on a spike instead of waiting.

AAL is currently trading at $26. You shouldn't be up +16% at the moment, you should be up +50% if you had not gambled a buy during a spike and waited for a cooldown and stabilisation.

I know we can't time the market, but there's certainly a matter of probabilities and patterns.


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## Jimmy (May 19, 2017)

This company may recover to $28 in the next year, where it was pre covid, so not a lot of upside left now so maybe time to sell and your gamble made $.

There are some other areas w more recovery room - maybe oil services,insurance companies etc. As Mr B mentions, it is better to buy on a low RSI entry pt where you can't help but make $. I don't know any stock I own where I didn't make $ buying at RSI in the 30s or low 40s ( 50 is avg). You can make $ easier ways so you don't have to gamble w the reddit users.


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## m3s (Apr 3, 2010)

james4beach said:


> especially with Biden's very strong vaccine rollout and air travel on its way to returning to normal.


Businesses may not want to fly people all around all the time now that they discovered zoom. From what I am hearing businesses are enjoying the cost saving and employees enjoy less time away from family

Not sure but from comparing my personal and business flights they seem to make most money from business


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## MrBlackhill (Jun 10, 2020)

m3s said:


> Businesses may not want to fly people all around all the time now that they discovered zoom. From what I am hearing businesses are enjoying the cost saving and employees enjoy less time away from family
> 
> Not sure but from comparing my personal and business flights they seem to make most money from business


I'm still wondering if that will hold true and how long it will hold true. Businesses are happy saving the expenses of "shipping" their employees to their customers, but business leaders enjoy the jet set life of travelling all around the world and spend way too much money at fancy restaurants with their clients. I recall going to some restaurant with a business owner and new clients. We were 7 around the table. The bill was $2,000.


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## Ponderling (Mar 1, 2013)

I have never had much luck with airline stocks Westjet I got back to where I started on Onex buy out. I was in a second tier air carrier just as covid hit. 

The one I am in now as an air type play is RTX. Only so many folks in the world make jet engines, and so a very wide moat round part of their business. Most likely a year or more before more planes/newer plane orders, but when they do.... and in the mean time other parts of the business spit the divvy, thank you.


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## MrMatt (Dec 21, 2011)

Ponderling said:


> I have never had much luck with airline stocks Westjet I got back to where I started on Onex buy out. I was in a second tier air carrier just as covid hit.


Airlines are a dumb business to invest in.
High capital, low margin commodity.


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## james4beach (Nov 15, 2012)

MrBlackhill said:


> That was an instant loss of -20% and you won't see your money until next year maybe.


My AAL position is now up 14%. Since the day I purchased, this has *outperformed* the S&P 500 which is up about 12%.

It's too bad you didn't buy. If you had just bought when the price came down after the spike (when I bought) you'd be up considerably more than I am.



MrBlackhill said:


> In fact, you've been impatient buying on a spike instead of waiting.


The trade appears to have been fine. Was I impatient, or did I take a calculated risk given circumstances that seemed to be in my favour?



peterk said:


> Looks like you got lucky James - I don't see a single trade today above $21.59 on AAL... It's all you!
> 
> Oh well. Maybe next time.


Just a bit of patience required. My position outperformed the index.

How about you?


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## MrBlackhill (Jun 10, 2020)

james4beach said:


> My AAL position is now up 14%. Since the day I purchased, this has *outperformed* the S&P 500 which is up about 12%.
> 
> It's too bad you didn't buy. If you had just bought when the price came down after the spike (when I bought) you'd be up considerably more than I am.
> 
> The trade appears to have been fine. Was I impatient, or did I take a calculated risk given circumstances that seemed to be in my favour?


Being in the green at the moment doesn't justifies the bad entry point on a spike. You'd be at +40% if you had bought at $17.50 the day after, so it's still an opportunity lost. To me, there wasn't enough calculation in the "calculated risk". Don't get caught in the hindsight bias. When taking a gamble, every little detail in the calculated risk can make a big difference in the outcome.

I'm much more in peace with myself when I but a dip and I'm in the red a few months later than when I buy a spike and I'm in the green a few months later.


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## james4beach (Nov 15, 2012)

MrBlackhill said:


> Don't get caught in the hindsight bias. When taking a gamble, every little detail in the calculated risk can make a big difference in the outcome.


I'm up even more today. Continuing to outperform the S&P 500 with this position.

AAL is even outperforming JETS, its sector. So it's really been a champ in this space.

It's sad that you guys have been so negative on this trade, even when some of you (MrBlackhill for example) are routinely fawning over speculative trades and playing endless back-testing games in other threads. Well, here was a *real one* for you to watch and you could have made the trade at the same time I did.


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## MrBlackhill (Jun 10, 2020)

james4beach said:


> I'm up even more today. Continuing to outperform the S&P 500 with this position.
> 
> AAL is even outperforming JETS, its sector. So it's really been a champ in this space.
> 
> It's sad that you guys have been so negative on this trade, even when some of you (MrBlackhill for example) are routinely fawning over speculative trades and playing endless back-testing games in other threads. Well, here was a *real one* for you to watch and you could have made the trade at the same time I did.


I wasn't against your gambling on AAL, I was mainly shocked by the entry point. I know, we'll say we can't time the market, but there's still a set of rules which are generally true.

You bought at $21.59 when the high for that day was $21.77 and the low for that day was $16.82 and the closing price of the previous day was $16.56 with a low at $15.38. That means you bought a +28% jump in less than a day. When a stock does such a jump, I always wait to see what happens the next day because most of the time it will either flatline before the next jump or pull back.


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