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(Chapter 22) Jeremy is a 45-year-old pilot who works for United Airlines. Jeremy hopes to retire...
(Chapter 22) Jeremy is a 45-year-old pilot who works for United Airlines. Jeremy hopes to retire in 20 years and uses his savings to purchase a stock portfolio to fund his retirement. Would you recommend that Jeremy’s retirement portfolio include an above-average, average, or below average weighting in airlines stocks? Why?
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Expert Solution
I would command below average investment in airlines stock because the sector is in grave danger right now due to fears of contagion spread through coronavirus which have impacted the travel to the largest possible extent.
Airlines companies are non operational from past 2 months and they are expecting to be non-operational for a few more months as there will not be any kind of movements in two different countries and people are sceptical about different tour and travels as this year that the contraction will spread.
so Jeremy is a 45 year old, and he needs to be concentrated into such sectors of economy which will return him in next 10 to 15 years and I feel like airline sector is not the same sector anymore, because it will be faced with insolvency problems due to non operations and lack of revenue. So I would recommend jeremy to have a lesser concentration into Airlines stock which would be below average allocation to the overall portfolio
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