1flyer

Didn't read thread but the answer is news.

songsc

I would also add randomness and irationslities.

Shareholder

Up 10% following meeting with analysts and institutional investors. They must like AC's Tango-minus and Comfort classes, expansion of Rouge on some domestic routes. Stock has doubled since last September.

CloudsBelow

When AC went downstream w/ Rouge, FT blew up with doom and gloom, lost business, brand theories, marketing lectures, demise assurances, funny hats, tweets, skytrax ratings, customer confusion and expectations.

... The know-betters won't be so eager to lecture the forum this time.

1flyer

News is by definition random (if it was deterministic as opposed to random, it wouldn't be news).

Stranger

Randomness is in the eyes of the beholder. At some level, everything is deterministic.

However if the thing gets too messy or too much information is missing, one ends up replacing a proper model by a probabilistic one. Just a model that one picks, not an intrinsic property of the system.

SparseFlyer

Could you please be a bit more specific in your explanation?

Are you saying that a random pattern is deterministic because because it can be represented in a deterministic way?

Or are you saying that a random pattern can have a deterministic trend?

Also, what do you call a "proper" model?

Stranger

I am saying at the root level everything is supposed to be deterministic.

Nothing is inherently "random." Randomness is a property assigned by the observer, with the statistical model being merely a tool for analysis. If the observer gives up trying to understand the actual physics, then he replaces the actual physics by some arbitrarily chosen statistical distribution. Arbitrarily chosen on the basis of reasonableness.

But let's not get into quantum mechanics. In which case I would rather quote Einstein about god(s).

Sebring

The stock price topped $27 today, before settling back into the $26.90 range. Basically, IMO, this is all about Air Canada stock finally joining its North American airline peer group after pretty much being doubted and ignored - for good reason - for over a generation. It's not that it's results are out of character with anything, it's that they are now in character, long enough, to be thought of as a worthy investment in a sector which had been normalizing over the past few years. AC still doesn't have the quality of results of some US carriers, though the gap has narrowed, but now it's no longer being punished by investors skeptical that its financial path was sustainable.

1flyer

Stock returns are a random walk. That's what empirical studies have found over and over again. You can condition on whichever information you want, you won't be able to predict stock returns. (Stock price volatility or higher moments in gernal are a different story.)

There is no theory from which you can obtain the actual law of motion of stock prices. And you certainly can't identify it from the data. For all practical purposes, changes in stock prices are random (news, innovations, noise, whatever you want to call it).

SparseFlyer

Well, it certainly does make the math preatier.

But the interdependency of the events makes it that as soon as new information arrives your price changes and there's money to make on that. Not just the news itself. What I mean is that as you go from E[S|F0] to E[S|F1] your E[S] will most likely change (relatively) deterministically regardless of if your e is random or not.

Besides, stock prices will always be partially deteinistic purely based on inflation.

jerryhung

I'm simply amazed/loss of words at AC's insane run-up since May 2017, or even last 3 days (+15%). Momentum is so strong since they raised the guidance, then ER, then Investor Day

52 week $10 to $27.xx, wow


Obviously hindsight is 20-20 and why did I ever sell ..
or switch to US airlines, which have fallen hard since their mid-July highs

Shareholder

Unlike WS and the three major US carriers (or even Chorus/Jazz), AC is still not paying a dividend nor announced plans to start paying one. Suppose the run up in actual market valuation makes up for a 2-3% quarterly dividend. (But my RRSP isn't complaining, though in a few years my RRIF might appreciate a new income stream.)

RangerNS

If I was a nuanced and long-term investor, I would concede that AC needs their $0.25/share more than I do

SparseFlyer

Thing is, a company should never pay out a dividen unless it has no immediate plan for it, or if it canmot provide a greater ROI than what I can get in similarly risky investments. The cash stays tax sheltered, and you get equity value in return.

This is why it's mostly banks, telcos, and very established companies that pay dividenwi. They dont have huge growth opportunities (which I assume AC thinks it has) and the money is better off in investor pockets.

Other thing is that dividend paying stocks are heavily influence by inflation expectations, the overnight landing rates, and the fixed income markets. And with the low yields and expected rate hikes, switching to a dividend paying stock would hurt equity growth too much by all the yield trader volumes and large institutional investors.