Airlines

It looks like the wheels are falling off a couple of the big airlines right now. I'm not sure who might have paid $3 (or there abouts) for Northwest stock on Monday but a 50% hit the next day is about as bad as it gets.

Some areas of the market are much tougher than others. I first realized how screwed up the airline industry is back in 1989 when the UAL LBO went haywire and caused a 189 point drop in the Dow (the Dow was somewhere around 2750 back then).

There are other areas of the market that are tough to own, although maybe for different reasons, as well. Insurance stocks seems to have a history of hurricane and regulatory issues. Old media, I think, is a dyeing business (metaphorically at least). DRAM stocks will cause a lot of heartache. There are probably others that I am not thinking of right now.

Whether you think investing is easy, difficult or more likely somewhere in between anyone can make investing much easier for themselves by avoiding some obvious mine fields.

You don't need to be Peter Lynch to know that owning an airline is a tough business.

A big part of what I do relies on trying to find very simple themes that allow the path of least resistance. My approach, as with any, is bound to mean there will be periods of beating the market and lagging the market but a little assessment of risk versus reward, like with any of the above groups, can help you miss a couple of dogs.

Any time I say something bad about insurance stocks, someone sends a nastygram but there are much easier ways capture the financial sector.