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| The Boeing 737 Max 8 was thought to be a great plane. It has harmed everyone but Boeing President Dennis Mullenberg. |
I have nothing against Boeing. I've flown in their aircraft many times through my life. I've even known a couple of people who worked for Boeing. They loved their jobs and they had a lot of respect for the company's engineering achievements. I don't want to take anything away from the people who have contributed so much to our defense and our economy. But now may be the time to "sell the news" as far as Boeing's stock goes.
If you're not familiar with the old investing adage, it goes like this: "buy the rumor, sell the news". The idea is that people will drive up the price of a stock on the basis of rumors and good hopes, but the news most likely to affect a stock price directly is usually bad news.
That's not always the case. Sometimes when a company announces a big change in strategy their stock goes up and competitor stocks go down. That happened when Amazon announced it would phase in 1-day shipping for Prime customers. Walmart and Target, the two biggest online competitors to Amazon, were hammered in the stock market.
If you're picking good stocks to buy, sometimes it's a good idea to wait for the storm to blow over and pick up the losers. Walmart and Target are good, profitable investments. So if institutional investors dump their stocks en masse because Amazon announces 1-day shipping, buying Walmart and Target in a couple of days may be a smart move. Both companies announced 1-day shipping and I think they are in better positions to get there first.
Boeing's problems are multiplying. Now the FAA is bringing in the Air Force and other government agencies to help sort out problems. I'm not sure the guys who paid $25,000 for toilet seats are the best men for the job, but they do depend on Boeing for planes and spare parts. They have a vested interest in ensuring the company fixes its engineering problem.
Boeing's 737 Max was supposed to be the plane of the future. But they made a bad business decision to charge extra for an $80,000 safety system that is designed to save lives. As a result, two 737 Max 8 planes crashed within a few months of each, killing all crew and passengers. Boeing came back and blamed one crash on a faulty sensor but the company is being financially punished for being cheap and greedy with a safety system on a $100 million airplane.
The Boeing 737 Max system may go down in history as one of the great failures in aviation. There have been many such failures, and some notable successes that achieved nothing. Howard Hughes spent years and millions of dollars designing and building the Spruce Goose, a plane made mostly out of plywood. It was originally proposed as a fast-production bomber and transport for World War II. But the war ended sooner than anyone expected and other planes were brought into production first. Engineers were also skeptical of the plane's ability to fly. Hughes flew the plane himself 1 time in a successful test flight after the war. And then the Spruce Goose was abandoned.
If we have learned only one thing from aviation history, it is that safety is the most important job in designing, building, flying, and maintaining aircraft. There is nowhere for people to go when something goes wrong. They can't abandon ship when they are in mid-flight and they are strapped to their seats during landings and take-offs. Flying is touted as being the safest mode of travel because there are so few deaths and injuries associated with it. But the statistics are being used to lie in a clever way.
The truth of the matter is that an airplane becomes a death trap when it's not properly designed, constructed, flown, or maintained. Sometimes people are lucky enough to be able to slide down an emergency chute but too many planes have crashed throughout history. The aircraft manufacturers have a moral responsibility to do everything humanly possible to make each flight as safe as can be. Boeing failed this time and they did so because of a willful business decision. The company's leadership should be held responsible for that, not their employees.
As someone who never bought Boeing stock it's easy for me to say it's not a good stock to own. But I feel for all the people who have relied on Boeing stock for years to support their retirement and investment portfolios. They have also paid the price of bad leadership's decisions. Dennis Mullenberg is the President of Boeing. He and others should be required to step down to atone for their decisions. You can vote for that by selling your Boeing stock. If nothing else, Mullenberg won't be able to harm your retirement savings again.
