With Boeing’s stock down roughly 70%, does the sell off seem excessive?

Here’s the thing about stocks: they always, always, always overreact in both directions.

But the thing about Boeing is that losing 2/3 of its value is what it does routinely every economic cycle.

Every 10 years or so I remind myself to buy Boeing when it’s PE is in single digits and it has huge order backlogs. Once it’s PE climbs above 30, I should sell it and buy long-term puts for the inevitable day when demand dries up and the PE goes back to 6 again.

And then I forget, again.

Boeing is the uber-cyclical stock. It it goes up when the economy expands and collapses when the economy contracts.

So is this an overreaction? No, Boeing is probably exactly where it ought to be. Which is to say, that it probably has not overreacted yet.

In prior days, on the heels of of 9/11 and the Great Recession, Boeing’s decline was pretty much preordained by the shrinking of its order backlog.

Today, however, instead of a small backlog they have a very large inventory of 737 jets that they ain’t never going to sell. That suggests to me that the overreaction to the downside has yet to happen.