Sunday, November 22nd, 2009

Why You should Sell Travel Stocks Now

Aug 15th, 2008 | By John Stepek | Category: Politics & Economics

Inflation’s soaring, the pound’s collapsing, and the Bank of England reckons we could be heading for recession. But one man still has a smile on his face.

Manny Fontenla-Novoa, chief executive of travel operator Thomas Cook, reckons he’s seen no evidence of consumers cutting back or trading down on their annual holidays. In fact, he’s even planning to stick prices up by 8% next year.

In this morning’s Telegraph, Richard Fletcher muses that while consumers are willing to put off replacing their sofa or their car, “the holiday… is sacrosanct, or so it seems. Even in a downturn, there are winners and losers.”

There sure are. But holiday companies won’t be among them. Here’s why…

The boom’s over. Most people probably accepted that around about the end of last year, as it became obvious that house prices weren’t rising anymore. And as the year has worn on, they’ve also accepted that the wider economy is in trouble. House prices are tanking. Credit is getting harder to come by. Energy bills are shooting up – and it looks like their monthly payments may well jump too when they have to remortgage.

All of that is enough to make people feel that bit poorer. And what’s the first thing you cut back on when you feel poorer? Impulse buying. Think about it. If you take a stroll down the High Street on a Saturday morning, with money in your wallet, safe in the knowledge that your house price rose by another £1,000 last month, then you’re very open to temptation. New pair of jeans? It’s only £40. New flat-screen telly? Stick it on the house.

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Source: Why You should Sell Travel Stocks Now


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By John Stepek

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About the Author

John StepekJohn Stepek is Deputy Editor of the UK-based financial weekly MoneyWeek. He is also the editor of daily investment email Money Morning UK. John graduated from Strathclyde University in 1996. He has worked for a number of financial magazines and newsletters including Families in Business, Shares Magazine and The Sunday Times.

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Money Week

Money Week gives you intelligent and enjoyable commentary on the most important financial stories of the week, and tells you how to profit from them. We have a wide range of financial professionals who write regularly for us, come to our monthly "Roundtable" discussions, and who contribute their expertise to the ongoing MoneyWeek debates. We write articles that we would want to read ourselves.

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