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Columbus Day Cruise Updates

Written by: Paul Motter

Happy Columbus Day! It makes sense for cruisers to celebrate Columbus day as he must be the most famous sailor in history. I don’t think there has ever been a first-time cruiser who didn’t wonder what ol’ Cristoforo Colombo was thinking as he looked at the horizon of sea water surrounding his three ships by 360-degrees.

I have crossed the Atlantic by ship four times. One of those trips was called “In the path of Christopher Columbus” That cruise started in Lisbon and called in Madeira, the Azores, Nassau and ended in Ft Lauderdale. This is actually pretty close to the original track where Columbus landed in San Salvador, one of the Bahamian Cays - the first historically sight of America by a European.

It’s a relatively good day, the stock market is going steadily higher as I write. Royal Caribbean stock hit bottom at 13 and change last week, a haircut of over 50% in one month (unbelievable). Are we seeing a bottom in the market? Many people are saying yes, at least for this current selloff, though there may still be some tough times ahead next year. Or maybe not – no one knows the future.

Carnival Corp. has lifted the fuel supplement charges for all Carnival brands; Carnival, Holland America, Princess, Cunard, Costa and Seabourn. Yes, they will be raising prices a little, but that is what most people want anyway – to have the fuel cost figured into the cruise fare - because it gives more clarity to the true price of the cruise. The price of oil has also dropped almost 50% / barrel, so this is a reasonable thing to do.

Now answer this for me. One reason market analysts downgraded Royal Caribbean stock, causing it to fall, was the cost of oil. Now that oil costs has dropped by 50%, should Royal Caribbean’s stock go down by 50%, or up? It should go up, logically.

For those people who may have a hard time understanding why the stock market behaves this way, the price of oil is a good example to explain the greater market dynamics. The price per barrel went higher and higher because the market saw demand growing. The more it went up, the more speculators wanted to get in on the momentum, so they bid it up even higher. Now that we see the economy getting less robust, with the consumer spending less and businesses cutting back on expenses, there is less oil being sold, more competition in the oil market and hence the cost per barrel has dropped.

The fact that oil went up to $150/ and is now down to almost 1/2 of that shows more than simple supply and demand. It shows what is called a “bubble” caused by speculation on where the price of oil will be in the future, not what it is worth now. To understand how bubbles happen is the key to understanding the stock market. Momentum and sentiment overrides supply and demand.

Cruise fares are currently historically low – we see 7-night cruises selling for as little as $249. Many more are $349, and you can get a premium cruise line like Holland America or Princess for $449 (lead rates for an inside cabin, plus taxes, but NOT fuel surcharges). It’s still a good time to be buying cruises.

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