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Guess which S&P 500 stock has gained 157% over the past year, beating Nvidia, Tesla and Netflix.Nothing related to artificial intelligence, data processing or energy: It is United Airlines.
The airline reported bumper fourth-quarter earnings this past week and suggested that 2025 could be a much better year than Wall Street was expecting. Its large trans-Atlantic footprint is an important advantage as a strong dollar encourages Americans to vacation in Southern Europe, even during the winter.
Similarly, shares in Delta Air Lines have risen 76% over the same period.
Are investors wisely anticipating the next supercycle in air travel or are they throwing their money into what Warren Buffett characterized in 2008 as "a bottomless pit?"
Those who look at the entire timeline since the Airline Deregulation Act of 1978 will probably tend to agree with Buffett.
If, 46 years ago, you decided to split $1,000 equally across the major U.S. network carriers and rebalanced your portfolio every month, you would now have $3,342-a gain that wouldn't even have kept up with the rate of inflation. Had you just tracked the S&P 500, you would have about $190,000 before inflation.
This story is from the January 25, 2025 edition of The Wall Street Journal.
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This story is from the January 25, 2025 edition of The Wall Street Journal.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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