Dividends and Aftermath of accident won’t be easy for Boeing or clients to ignore

In mid March a plane went down flying to Kenya, the operator was Ethiopian Airlines and all the people were killed. The first concern is the people that were killed. The second concern is what was the cause and who made the airline. It turns out the cause is software in the plane and the maker is Boeing. Boeing’s stock went down.

The next question is how important is the plane to Boeing’s future. Was it an old plane? new plane? It turns out the plane is called 737 Max and Boeing fights with Airbus in the very lucrative mid-sized market. The 737 Max to Boeing is the future and it was designed to be a better aircraft in multiple ways and Boeing has pre-orders for 5,000 of the planes. The planes are made in Washington State, Boeing was making 50 a month and were trying to push that up to 85 a month, orders of the Max 737 make up 2/3s of future deliveries and 40% of the expected profits for the next 5 years.

According to Barrie McKeenna, in late October there was a plane accident with Lion Air which Boeing’s people believed was partly pilot error, the pilots did not follow an emergency checklist to override the software. Boeing had continued to make sales of the planes. The weak spot was China, which the US is involved with a trade war and the Chinese have stopped buying planes from Boeing.

Boeing as a stock has been the poster boy of the rally since December and due to its increases was comprising 11% of the Dow Jones 30 Index. If you invest in index funds ensure you know what you are investing in. For best view of the market the S&P 500 is a broad based index. Due the accident, there have been many articles on the airplane market and if you are an investor read the articles from that perspective you can learn things.

Linking to dividend paying stocks, accidents often give good information from different perspectives, after you are concerned with the people, you can better understand the industry and if you wish to invest in it. How do companies make money? who are the major players? what does the company have to do to earn and maintain trust to have sales? many people when they book flights the last thing they are concerned with is the maker of the plane. When a company has an accident and the shares correctly fall, when is the buying time? Patience is a virtue, but there was a reason why the shares were up and will they reach their old highs? Fortunately with investing there is no right and wrong, only different opportunities and looking backwards you will be able to tell if you made the best decision.

There are more questions than answers, till the next time – to raising questions.

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