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Quantfury Daily Gazette

Cruising: Your investment isn’t sunk yet

by

It remains one of the enduring memories the early days of the COVID-19 pandemic.

As the world shut down and hid in their homes for the beginning of what would be a three month push to get through the first wave of the pandemic, stories started to come out of cruise ships being stuck at sea, while filled with this new and scary virus.

No one would let these ships dock. The people on them were treated as if they themselves had cased the pandemic. They weren’t someone’s parents or grandparents, but rather privileged monsters that deserved to be floating on a death ship.

Eventually, the biggest ships managed to get people off the ships and most of the world forgot about the problems. Few realized that there were still people stuck on the sea until last fall. That’s largely because the people stuck were poor workers from poor places.   

The pandemic was bad news for a lot of businesses, but arguably none were hit as badly as the cruise industry.

So yesterday’s news that the CDC would allow the industry to hit the water again come July was met excitedly by the industry.

And, so did the market.

Norwegian Cruise Line (NYSE: NLCH) was up more than 6.5% after the market opened Thursday, while Royal Caribbean (NYSE: RCL) rose 5% and Carnival (NYSE: CCL) saw about a 4.5%.rise.

Truthfully, the market has remained fairly stable on the cruise lines over the year, despite the pandemic. Which begs the question of why?

How is it possible that any travel stock is still worth anything?

It’s not for the business reasons. As stated, the cruise lines can’t sail until July and not many businesses can take a 18 month shut down without suffering. In general, the western world is starting to be able to see this pandemic ending, but that’s not the case in a lot of the places that they might want to travel to. So, should we be bullish on travel just yet?

As I say every time here: I don’t know. You should decide that yourself, but I do know that. The market is often as emotional as it is logical and people want to feel hopeful that this nightmare will be over soon.

The travel space represents hope.

If you have enough money to be investing you probably also have enough to go on vacation. You’ve missed that and you dream of the time when you can again. So, when you hear news that cruise lines can operate again in July you think, ‘Yeah, I’m down with this!’ and that influences your choice to invest in the space.

The long-term business prospects aren’t really your concern here. No, you just want to dream of a vacay!

Lots of people do, which is why news like this will always hit on the emotions of all of us.

Does that mean, I’m going to be on the next cruise ship out of Miami? Hell, no. They were floating petri dishes of disease before the pandemic.

But, those that were inclined to ignore that will still probably be and, I suspect, there will be some good deals to entice them back on the boat. 

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