Industrials: Boeing

Boeing presents an interesting diversification across military and civilian earnings streams as it is produced airplanes for airlines as well as military contract work. What is the biggest difference between the civilian and military worlds? I would presume it is in the civilian world, most events are driven by money while in the military world most events are driven by safety. In the end, the entire industrials sector is composed of companies whose businesses are too large for an individual to process, and much of the success seems to lie in the hands of fate or luck. This is only the appearance though, because the industrials sector is fundamentally more military than civilian in how it is organized. If your product keeps the United States safe it probably will sell in the industrials world. To make money from military type machinations is similar to trying to make money from art: you can’t. You can only do your art well, or in this case, do your engineering well, and hope things work out. If you invest in this sector, you invest not in the most commercial artist or military guru, but the Van Gogh because if you can find him, you turn brass into gold, as he will find some way to return you the favor that you have invested in his works. If his stock price doesn’t go up, maybe some of your other stock prices will go up as in an efficient market, there is very little privacy implied as private information becomes public information very fast. In short we are all working together on problems and if we solve them we get rewarded and whether or not we can manage our businesses well is a function of whether we can solve these problems well at the end of the day not whether we can spin money around. There were people who specialized in spinning money around so people like military Van Gogh engineer would work on his SpaceshipOne to launch into space, but these people largely failed in the catastrophic leadup to the financial crisis in 2008. Well maybe not all of them failed.


No comments

Other posts

Fundamentals – HRB, JWN, KMX, KORS, KSS
HRB — H&R Block talks about the risk that governments will prepopulate the tax forms with a change in paperwork JWN – Nordstrom’s has underperformed the stock market and there is talk about taking it private, but the general idea is a company can have a great balance sheet (which is usually priced in), and a great corporate strategy and business, but if it underperforms earnings expectations each quarter and...
Read more
Fundamental Coverage – HAS, HBI, HD, HLT, HOG
Hasbro has had a stock price that has taken off last couple of years and a very good model of storytelling combined with games to make toys, which is sort of what we do here in Lucas Orchard (toy models or simple models) when we aren’t discussing serious topics of importance. It is important to understand where the boundary of storytelling lie or you would be generating fake news, and...
Read more
Fundamentals – GM, GPC, GPS, GRMN, GT
General Motors has some good research going on in fuel cells and other areas. Genuine Parts distributes auto parts as well as other hydraulics and some office supplies. Gap has declining year over year same store sales in its main brands but better ones in Old Navy which has a little lower margins I would think as it is more value oriented brand. Garmin makes instruments such as sports indicators...
Read more
More posts