If shares of Boeing do go into a nosedive over production delays, as I believe they will, bitter holders will shake their heads over the nosebleed altitude to which valuation has ascended this year. On a trailing basis, over the past 10 years Boeing's price-to-sales multiple has run from 0.69 to 1.1. It's now well above the top end of the scale. Boeing's price-to-book multiple has run from 3.5 to 5 over the past 10 years. It's now almost 6.

Investors pay a premium for an industrial company's shares when they believe it is halfway through a business up cycle and recent earnings growth will extend at least three years into the future. They pay absolute top dollar when they think a company whose growth has been cyclical in the past has found a way to smooth out its ups and downs and bring in steadier cash flows through diversification efforts.

So what are investors thinking? Forgetting the risk of production delays and the loss of face that would entail, steady cash flows could hardly describe Boeing, which is now, and will forever be, tied to the ups and downs of the worldwide demand for commercial and, to a lesser extent, military airplanes.

With energy costs persistently high, global stock markets reeling, worldwide economic growth flattening and the threat of pandemic hanging over travel, the airline business does not look like an ideal place for investment capital at this time -- and that goes double for companies that provide capital equipment, like Boeing.

The case for Boeing shares over the past three years has rested on its brilliant campaign to best its only major rival, Airbus, in obtaining orders for next-generation commercial aircraft. Airbus made a big bet on offering a gigantic new double-decker, wide-body jet that would transport up to 800 people at a time; Boeing made its own big bet on the 787, a more fuel-efficient aircraft that proposes to save airlines money. So far, Boeing has won the race for new orders by a handsome margin.

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