Claymore/NYSE Arca Airline (AMEX:FAA)

TrojanFan (90.59) Submitted: 3/9/2012 3:49:22 PM : Start Price: $28.35 FAA Score: -9.92

The airlines is a god foresaken industry. All the major carriers are on a never ending merry-go-round in and out of bankruptcy and this will not change thanks to the dependence on oil for jet fuel and the oil industry's dwindling ability for marginal production to keep pace with marginal demand.

Oil prices are just going to grind higher and thanks to the near perfect competition in the industry, the airlines are going to have a very difficult time passing those costs on.

Don't get me wrong, planes are cool but investments in airline stocks are not.

An armed confrontation with Iran is all but assured at this point and even the timing is crystalizing to likely be before the US presidential election. The only uncertainty at this point is the extent of US involvement and how much sustained damage Iran will be able to inflict in their counterattack. Israel is so determined at this point and Netanyahu has painted himself into a corner so there is no turning back now.

No matter what happen, a sustained oil price shock of record setting proportions just in time for cancelation or avoidance of summer vacation air travel is almost a certainty.

That's just the oil price impact. That's not even considering the potential for terrorist retaliation around the world targeting air travel which is very possible.

I'm positioning in CAPS for a big decline in airline stocks.

Even if I'm wrong about Iran, the airline industry consistently underperforms the S&P 500 over the long haul and this will not change so these picks are going to be a winner either way.

BlackTerror (< 20) Submitted: 9/13/2010 1:10:17 PM : Start Price: $33.62 FAA Score: +28.19

Jet fuel is one of the most expensive types of oil products, requiring high quality, high octane production. Inevitably increasing fuel prices will render most airlines helpless in the years to come.