Kaminsky's Call: Buy This Sector to Beat the Market
Wanna know why you can't beat the market?
Because you continue to own names like IBM and Bank of America — great companies for sure, but terrible stocks that are owned by the worst kind of investor, the "closet indexer" (more on that in a bit).
If you're ready to try to beat the market, then my call to action will certainly sound bold: buy the airlines, and here's why:
Airlines are not investments. You will never see one in the vaunted "one decision stock club."
But they can make great trading tools either from the long- or short-side, particularly in a market that seems tethered to 10,000 level for the next 200 years.
I happen to like them here from the long side, especially Delta . Unlike previous times, the industry has finally weaned itself off its nasty habit of grabbing market share through price wars. Moreover, capacity remains at reasonable levels. And don't expect those irksome extra fees for pillows and baggage to disappear anytime soon. Put simply, the airlines have something that has alluding the industry for years: pricing power.
Delta's got all of this going for it, and something else: its merger with Northwest is one of the few (I like to say one in ten) that appears to be working out. There are real costs savings here, as evidenced by yesterday's earnings, and that should bode well for the company, even if the economy heads south.
But here's the real reason you may want to get on board: owning these stock could give you an edge against the broader market. There are no closet indexers (fund managers who claim to add value but really just buy the broader index) surreptitiously picking up shares of AMR. This is big boy swim territory. Index huggers (same concept) need not apply here either.
So if you want to stand out, if you want to try and beat the market, airlines could be your ticket.
- Analyst Watch: Airline Stocks Ready to Soar?
- Boeing CEO Talks Deals at Farnborough
"The Strategy Session," hosted by David Faber and Gary Kaminsky, airs weekdays at Noon ET on CNBC.
Gary Kaminsky does not hold any equity positions.
The content of this blog is published in the United States of America and persons who access it agree to do so in accordance with applicable U.S. law.
All opinions expressed in this blog are solely the opinions of Gary Kaminsky and do not reflect the opinions of CNBC, NBC UNIVERSAL or their parent company or affiliates, and may have been previously disseminated on television, radio, internet or another medium. You should not treat any opinion expressed by Mr. Kaminsky as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Mr. Kaminsky’s opinions are based upon information he considers reliable, but neither CNBC nor its affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Kaminsky, CNBC, its affiliates and/or subsidiaries are not under any obligation to update or correct any information provided on this website. Mr. Kaminsky’s statements and opinions are subject to change without notice. No part of Mr. Kaminsky’s compensation from CNBC is related to the specific opinions he expresses.
Past performance is not indicative of future results. Neither Mr. Kaminsky nor CNBC guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment discussed on this website or on the show. Strategies or investments discussed may fluctuate in price or value. Investors may get back less than invested. Investments or strategies mentioned on this website or on the show may not be suitable for you. This material does not take into account your particular investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. You must make an independent decision regarding investments or strategies mentioned on this website or on the show. Before acting on information on this website or on the show, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.