Rewind That Tape

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Yeah, OK, before I deal with the email that I have gotten about Wednesday's column, I want everyone to know that yes, while I liked what I saw on Monday and Tuesday and even early Wednesday, no, I did not like what happened at the close of the bell Wednesday, and I really didn't like what I saw Thursday morning.

Whew. What a wonderfully positive combination of indicators I am looking at here as I peruse the activity of our favorite 41 airline stocks. Not.

Resilence? It's being tested.

Majors holding steady? Well, kinda sorta. Depends on what time you look at the tape.

Speculative money was suddenly yanked out of the sector late Wednesday, and so far Thursday, it is drifting out as well. But I am concerned that it will get worse towards the close of the bell. We'll just have to wait and see. In all the activity of the last month, I have not seen two days back- to-back with this kind of flight from the airline stocks that we consider to be speculative money pits.

And hey -- how about a strange case of delayed reaction just to make matters even worse? Look no further than

Delta Air Lines

(DAL) - Get Report

. I mean, how long does it take for information that was out

last week about the demise of the Delta/

United Air Lines

(UAL) - Get Report

alliance to be understood on the Street? A couple of days? A week? (I guess everyone was just too busy trading their emerging-growth-fund stocks to read.)

And then there are our old friends at

America West

(AWA)

. You know, the airline that has used the old "squeeze yields 'til they squeak" formula to bump up earnings and the stock price, all the while delaying the inevitable -- pay increases for a number of the airline's labor groups and/or higher staffing levels. Yes, well, trading on America West was delayed Thursday morning as the company came out and said that they would not meet analyst expectations for this quarter. Are we surprised? No. But, then again, should this announcement be cause for the stock to shed some 26% of its value in about three hours? No. Great timing, folks. Abysmal market conditions coupled with news of less-than-expected earnings on the horizon. No mercy today. Off with their heads.

So now that we have gotten all of this off our chests, let's take a few moments and address some questions that readers have shot my way -- as I think the information might be helpful to many of you.

Question: When you say that you would be a buyer, are you talking short term or long term?

Answer: I never said that. That was my evil twin sister.

Seriously, when I wrote that Wednesday about 2 p.m., I did believe that there appeared to be enough stability in the sector that any further drops would not be that significant. I was talking about buying from a longer-term perspective. And even with Thursday's activity, I am not sure that we aren't hovering around eventual lows. Unless, of course, the whole market tanks in a serious way.

Do I think this is a buying opportunity for short-term? No, no, a thousand times no. There

has

been great volatility in the speculative money-pit airline stocks that we mentioned Wednesday -- but I'm talking day-trading type of market guessing there. When I talk short term, I would be talking months. And I don't see that yet.

However, from a long-term perspective, yes, I felt Wednesday that the signs were good for buying certain airline stocks.

Question: How can you even consider investing in an airline at this point in time?

Answer: Well, given the right airline, I'd certainly put it up against some hot-shot emerging growth fund as an investment potential.

Again, let me say something here for some of our less experienced investors. I will be the first to tell you: Never, ever think that you can put your money into an airline stock, sit back with your

Beefeater

and tonic and think that the retirement money is now safely invested. This sector changes too fast. If you are an individual investor, I would recommend two things:

1. Never put money that you need in the next year into an airline stock. I don't care if the stock is climbing at 15% a month. Too many things can affect this sector with lightning speed.

Saddam

could shoot down a U.S. airplane and shut off his oil. An airplane could crash and cause the stock to crash as well. All in the blink of an eye. And heavens knows we certainly don't need to be reminded of this today.

2. Know what you are investing in, and keep up with what is going on with your stock. Sounds simple, eh? But many smaller investors do not do this. They buy the stock and never take the time to keep tabs on what goes on in the industry, much less with that particular airline.

Question: You recommended before earnings in July that investors might want to "yank those profits." I didn't. Now what?

Answer: Several Beefeater and tonics will help.

No, if you had profits and did not take them, and are now looking at stocks that have lost 30% of their value in the last two months, guess what -- you have two choices. Hold on to them or sell them. If you own

AMR

(AMR)

, parent of

American Airlines

, I'll let you in on a secret that I absolutely positively know is true. American Airlines is not going out of business tomorrow or next year. And I'll be really brave and say, probably not the next year either. And at $50 a share, it is enough to make one dizzy.

On the other hand, look at your tax situation and how it is shaping up for the year. Perhaps the loss you will realize by selling your shares will be an overall positive in terms of your taxable income for 1998.

But, trust me, crying, wailing or stamping of one's feet will not help.

Holly Hegeman, based in Dallas, pilots the Wing Tips column for TheStreet.com

. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. You can usually find Hegeman, publisher of PlaneBusiness Banter, buzzing around her airline industry Web site, at

www.planebusiness.com.