“Take advantage of the Boeing snafu” again

This was the title I first introduced Boeing about 6 years ago in 2013 (see here). At that time, Boeing (BA) was quite unloved or even hated widely and it was trading around $80. Why? “......problems associated Boeing, the grounding of the problem-plagued 787 Dreamliner - the most technically advanced new model of commercial airplane manufactured by Boeing.” Sounds familiar? Indeed Boeing is facing a very similar problem today, worldwide grounding of its 737 Max 8 planes due to the recent two fatal accidents from this model within 5 months. It is a disastrous crisis for Boeing for sure and the negative impact will likely continue for a while before getting better.

Believe or not, while Boeing has being doing more than great in the past 6 years by jumping 5 times higher since I promoted it, the recent breakout over $400 was a bit too much too soon technically speaking. A clear negative divergence on its momentum indicator was sending a clear and loud warning that a turning point of the uptrend was coming. That was the time I told my friends to watch for the downside of Boeing at least for the near future and I was looking for a correction down toward the $375 level. Well, I couldn’t know what would happen to make the correction materialized, its TA did again prove the prudence of its forward-looking! So now BA has touched $362 within two days after the crisis breakout, shedding off about 15% from its peak. I’m hearing the talking heads calling for the bottom of BA correction and recommending to do bottom fishing. They could be right but I doubt. I won’t be surprised to see a fast rebound towards $400 after such a swift downdraft, but I think there is a high chance of at least another leg down to test its lows and it may even go down further towards $350ish level. At the moment, it is just too early to call where BA will land and for how long it will struggle. But it probably won’t be just in days to do a V shape recovery. Highly unlikely!

Having said that, my main point of this blog is to promote BA again to take advantage of the current snafu to pick up a few shares of Boeing for long term. Yes, it is not as cheap as it was 6 years ago but this sizable correction has knocked it down to a reasonably cheap valuation relatively speaking. The most important thing is that this crisis, regardless how abysmal it looks like for BA, is a temporary resolvable problem for a fundamentally solid company. This is a “dream comes true” moment for value investors as long as you have a long term horizon and are willing to hold it for long term. All the fundamental points I presented back in 2013 are still true in principle. The lower it goes, the better for BA investors! Remember what Buffett said: Be greedy when everyone is fearful!!