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American Airlines and General Maritime bankruptcies create short opportunity for shipping, airlines (AMR, GMRRQ, SEA & FAA)

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Bankruptcy filings by American Airlines ( AMR , quote ) today and from General Maritime ( GMRRQ , quote ) earlier in the month emphasize the profitability of shorting the exchange-traded fund for airlines, Claymore Airlines ( FAA , quote ), and for shipping, the Guggenheim Shipping ETF ( SEA,quote ).

This was detailed on www.emergingmoney.com in a previous article, " Shorting transports into a possible commodity bounce."

High fuel prices will continue to plague shippers and airlines. In addition, economic growth is slowing in China, India and Europe. It is still anemic in the United States, too. This reduces traffic -- both passenger and commercial -- for ships and planes. In addition, many carriers and shippers are loaded with debt from overly ambitious development strategies when times were better.

Shorting the ETF can be better than simply shorting individual stocks in trouble because profits can be made from the decline of the industry without being caught off-guard by unexpected developments in individual company stocks, such as a takeover or merger. Besides, by this point the share prices of many airline and shipping stocks are so low there is little to gain from shorting.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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