Ba shares?

londondealer

A friend of mine has just purchased 50k's worth of BA shares on top of the 50k she already has. Warned her its not a good idea. Do you think it was a smart move given the current economic climate?

Cash-Cow_3

If we knew the answer to this we would all be either buying BA shares or selling what we already hold.

JoeCrystal

If the holding in International Airlines Group is her only investment, then it is not a good idea. Diversification is really necessary!

As for worthiness of investing in IAG, I am afraid that I have no idea!

vivatifosi

I have no idea either, but one good piece of news is that at least they are taking on staff at the moment: it launched a recruitment drive earlier this month for 1000 new staff (pilots and cabin crew IIRC).

Also agree with those saying holding only shares in one company or a very small number of companies is a pretty risky strategy.

IronWolf

Airlines have historically never been a great investment

londondealer

Thats what I thought IronWolf. BA shares really went up high a few years ago, personally I wouldn't put all my eggs into one basket.

MacMickster

I seem to remember a chap who was on TV a lot a few years ago, who had invested his full £100K plus of savings in Northern Rock shares. He couldn't accept the fact that he had lost his life savings due to a pretty stupid investment strategy, and considered that the government should reimburse him.

If your friend is fully aware of the risks and is prepared to accept them (and could live with the consequences if it all goes t!ts up), then how she invests her money is her choice - but it is not a strategy that many would recommend.

michaels

The shares are more volatile than the market out performing on bullish sentiment and under performing on bad news (Currently down 40% from recent peak when the overall market down 20%). They also show some correlation with oil prices (hard to disaggregate from overall economic sentiment of course). Any one airline of course might have its own disasters so investing across the sector would make more sense. Also punting using an ETF might be cheaper and the same exposure without the tax liability could be achieved with for example CFDs.

Generali

I wouldn't have more than 10% of my wealth in a single share so it depends how rich your mate is.

They make a profit which is a good start however they have taken part in a big merger and mergers almost always destroy wealth and shareholder value. They have a net positive cash position which is a good thing in these volatile times.

michaels

I know takeovers have been shown to destroy shareholder value. Is the same true of mergers. Obviously in an industry still made up of 'national champions' there may remain scope for further economies of scale. I know someone who works in the iag cargo areana and they are definitely benefitting from network efficiencies in what is one of the most integrated part of the organisation at present.

sabretoothtigger

Dont hold 10% in any one thing is generally a good idea. The exception is the house you live in but at least thats practical, I take it your friend works for BA but that could be a case of double jeopardy

Asia aircraft use is expanding but I think the west is not especially growing.

The only reasonable tip I heard of airlines recently was a small western Australian firm transporting mining workers over the large sparse but commodity rich landscape. That is an expanding prospect. Also Rolls Royce are doing well as a key world player in turbines both for aircraft and in energy production

BAE would be more like it with 7% yield