Trick.
It might be Halloween, but this is legitimately scary.
Recent movements in the share price of Qantas Airways Limited (ASX: QAN) are a perfect example of the short-term reward seeking so prevalent in the market.
Investors are essentially shooting themselves in the foot for the chance at a few bucks in short-term profit, when buying the right companies for the long term can deliver significantly better performance (plus dividends!).
Over the past 52 weeks, Qantas shares have delivered 27.5% in price growth and no dividends, but at the cost of wild price swings and high risk amidst a continuous barrage of negative press.
Buying Commonwealth Bank of Australia (ASX: CBA) shares – hardly a stellar investment themselves – would have delivered 9.5% plus franking credits (and minus the rollercoaster) in that time for much less risk.
Macquarie Group Ltd (ASX: MQG) grew 17.5% and paid a further 4.6% in dividends (40% franked) for a total return of over 22%.
These are some of the biggest companies on the ASX, and there are even better rewards out there if you look to mid or small-cap growth stocks.
The really scary part is that Qantas has shot upwards with no real changes in its fundamentals.
Ok, so a weaker Aussie dollar might – might – reduce competition from overseas airlines.
That's assuming the AUD actually weakens against other currencies, of course.
Lower oil prices will help reduce costs, fantastic, and Qantas has recorded modest passenger growth of around 3% so far this year, great.
This is all good news, but investors are focussing too much on the pretty surface textures and ignoring the fundamental ugliness facing the airline business.
As fellow Fool contributor Owen Rasckiewicz notes here, investors need to look forward to the future when considering a purchase – and he's right – but it's also vital to remember a company's history before making an investment.
If you read the paper or watch the news occasionally you'll know that Qantas' history has been a long, long list of impairments, sackings, fiascos, and so on – not to mention total destruction of shareholder value.
If you've been a long-term investor in Qantas you've lost 57% in the past 10 years, or 41.4% over the past five.
While the company might be on the road to recovery, the long-term problems facing Australian airlines will continue and I believe Qantas is still a highly risky proposition.
Considering you can make similar returns elsewhere for far less risk, why would you even bother?
Be smart about it and look elsewhere for your investing kicks.
A much, MUCH better bet than Qantas Airways..