Similarities to other market downturns
The markets feel eerily similar, wild swings, triggering circuit breakers, VIX through the roof, and panic selling, only exacerbated by the computer modeling and speed of today’s market.
- Pockets of pain — immediate consequences to different market segments, although different segments, the immediate effects are selective and will affect specific aircraft types and models.
- Fear driven behavior — deposits are being forfeited en masse with buyers quitting deals and walking away, almost all activity slowing to a halt, nearly identical to the previous downturn.
- Inventory building — price always follows inventory and in an increasing inventory market is led by the seller with the most pain. We can predict that selling behavior will favor the seller who leads the market, not the one who chases the comps and falling knives. This was demonstrated repeatedly for a period of 24–30 months during the last market crisis.
- Winners and losers — the opportunity to gain value in trading up benefited buyers that could sell and buy confidently massively from a value perspective. If you wanted to increase the size of your aircraft, the gains in percentage of value and dollars overall will be a once in a cycle value opportunity.
- Texas Tea — During the last downturn, oil prices plummeted causing the Middle East, Africa, and Russia/CIS to feel some real pain. West Texas got hammered, and the global black gold flow flooded the market with inventory. One difference to note is that the international oil fueled economies have mostly all sold off, so this time it will be a domestic affair.
