RE:RE:RE:RE:THE NATURE OF SUPPORT, RESISTANCE AND BREAKTRHOUGHGreat food for thought Pablo. I do understand and appreciate what you're saying.I'll respond in segments:
1) The Fed: The Fed has gone on record suggesting they will do whatever is necessary to beat down inflation. While the Fed, I believe, is a well meaning agency, they do have a track record of getting it wrong. Look no further than them saying inflation was only expected to be transitory.Of course, we're all brilliant looking in the rear view mirror. Will the Fed get it wrong again? Yes, I expect this. I think they will overshoot, and I also think a lot of the inflation issues are still really supply chain issues.
As for the market, the market looks for the bottom. The market expected inflation pressures to improve, and that was the rally last week. Yesterday's 1200 point drop was just giving that rally back, and a bit more. So now the market expects at least one, if not two, further rises.
But here's where it gets tricky. Because when the market prices in the "bad news", that then represents the bottom, and the time to buy. Are we close to that bottom and/or overshoot? I think this next raise will show the bottom. Will the Fed will still raise again in November, I believe it will be more tempered, which the market will like. So all in, we're close...ish.
2) Bombardier Debt: I get what you're saying about the debt, and how it is becoming more expensive. It is a double-edged sword that as the company does better, the price of the debt rises, making it technically tougher to pay it.
BUT
You have to ask yourself what the market cares about. And for Bombardier, that "WIN" is seeing a clear path forward. It's as if they've been bushwacking through the jungle for years, lost, and all of a sudden they find the best path ever, much to everyone's suprise. Is the market measuring the debt? No, they're not. The market is saying "Holy shiite, they found an amazing path out of the jungle, and it's not just maybe. It's crystal clear to see." So if the debt is a little more expensive, essentially it becomes "who cares", because that path forward IS now clear.
Humbly, I suggest you're focusing on something the market is not caring about. With that, sometimes you have to put aside what you think is important and look only for what the market thinks is important. With that, you have a massive win potential here.
You're an old dog? Ha, I probably have you beat on that front. But as one of those "old dogs" I wouldn't trade the experience and wisdom of the years for anything. I've seen it all, and the more times I say "I've seen this movie before" and know how the movie ends, the more money I make.
With that, I have no problem saying there will be a massive amount of money made on this stock, and it will prove to be the biggest turnaround story that I think I've ever seen in my multi decades in the market. And here you are...here we all are, at the beginning of this unfolding turnaround story. Damn, that's a fine place to be! ;)
PabloLafortune wrote: Star, in all honesty, this stock trading is beyond my pay grade and you know what they say about old dogs.. Like I said, I have noticed that there appears to be a pattern of beating the stock down early in the trading session and then rallying after the initial 90.
What I'm keen on at the moment is long term debt buyback if at all possible. Yesterday CVE bought back $2.2B USD of LTD via a tender process at some attractive prices. Gundlach has been fairly critical of the Fed, saying the S&P may crater another 20% if they raise rates too quickly. But he also said its a good time to buy long term debt and if its a good time for investors, its a good time for companies to do so as well (the thinking being that a) they won't listen to him and others and b) the Fed will thus overdo it and will be forced to lower interest rates back down again down the road and c) bond market is forward looking to the Fed capitulation either now or later). Bombardier's 2027's went down to 83 cents at one point and are now back up to 97ish. By Q4 results ie March they could be trading well above par in which case Bombardier will be stuck either continuing to pay a lot of interest or paying a premium to buy these back.
So its not all roses - we have macroeconomic risk with the backlog and we have macroeconomic risk with interest rates - because buying back the debt is absolutely necessary to reach the point where operating cashflow is positive every quarter. IMO.