Boeing or Every Dow Jones Stock
It is a difficult investment option. On the one hand, the defeated shares of Boeing (NYSE:BA) could be ready to recover now that its problematic 737 MAX jet has been (re) cleared for takeoff. On the other hand, the pre-election and post-election environment can be better navigated with the relative certainty of deep diversification. A publicly traded fund like the SPDR Dow Jones Industrial Average ETF Trust (NYSEMKT: DIA) offers 30 different top-tier stocks spanning most major sectors.
As it stands now, it seems that the smart money move is an investment in every Dow Jones stock rather than a bet on Boeing’s rebound. But the odds are also good that the aerospace company will eventually turn around.
Is it now time for even risk-oriented investors to take a steering wheel at Boeing?
Entrepreneurs with arrows pointing in different directions.
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Boeing seems to be rolling to the runway
Technically speaking, the 737 MAX has not yet been certified for use as a passenger aircraft in the United States by the Federal Aviation Administration (FAA). It is close enough and likely enough, however, that American Airlines Group has put the plane back on its flight schedule starting at the end of December. The European Union’s Aviation Safety Agency said last week that it was satisfied with the updates to the passenger plane, further clearing the way for the aircraft to fly within the continent before the end of 2020.
It would be the first time the plane has flown anywhere since it was based in early 2019 after two crashes that claimed a total of 346 lives. A handful of successful flights should encourage other companies to re-Place the aircraft in their active fleets, which in turn should lead to new and renewed orders for the aircraft.
However, that’s a big bet for investors right now, for a couple of reasons.
Two ways a takeoff could be aborted
While regulators may be pleased, consumers and lawmakers appear to remain cautiously reticent in the wake of what was described in a scathing congressional report as a “horrible culmination of a series of flawed technical assumptions on the part of Boeing engineers, [and] a lack of transparency on the part of Boeing management.The language reflects the depth of mistrust that Boeing must address now. Not even the company is looking for a quick end to the debacle.
Nor is it inconceivable that a White House led by Joe Biden could enact stricter accountability standards early in his presidency. A recently introduced bill now in front of the Democratic-led House of Representatives suggests giving the FAA greater authority over U.S.-based aircraft manufacturers.
Meanwhile, the coronavirus pandemic has caused as much lasting damage to Boeing and its peers as the problems of the 737 MAX. The company warned investors earlier this month that demand for new passenger aircraft for the next decade would be about 11% less than Boeing had previously predicted.
And this perspective is probably based on a suffocation of the virus in the near future. However, that may not be the way things go. Coronavirus cases in Europe are on the rise again, and by some measures breaking records set earlier this year. The U.S. Center for Disease Control reports that domestic cases are also on the rise, with new cases nearing July highs.
The point is that there are still many ways in which Boeing could trim its wings, in the near and not so near future. However, these forms are exclusive to Boeing and do not apply to the other 29 components of the Dow Jones Industrial Average.
In fact, despite all the recent economic turmoil and uncertainty related to this year’s presidential election, blue chip companies as a group are holding up very well. All but one of these 30 stocks are expected to improve this year’s bottom line in the coming year, and only the outlier, Intel, is expected to see a single-digit drop in earnings. And no matter who is in the White House at the end of January, both sides want all American companies to start thriving again, sooner rather than later.
This will not always be the case. But the current scenario is one that requires a simple and straightforward strategy rather than relying on luck for a particular company.
Where to invest $ 1,000 right now
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