I had gotten some e-mails from readers asking about Alcoa’s proposed spinoff of Arconic later this year, and I don’t currently have any comment on the quality of Arconia as an investment because I don’t know enough specifics about the operations that are about to be spunoff. But I do know enough about Alcoa’s core aluminum business to say this: Never make a long-term investment in the aluminum sector. Especially an operator that has a lot of debt and steep losses during extended declines in the sector which are never offset by the short-lived and dispersed years of high aluminum prices.
Since 1990, Alcoa shares have only returned 2.38% annually. That wouldn’t have even kept the pace of inflation. Your $10,000 in 1990 purchasing power would be reduced to around $8,500 in purchasing power today once the effects of inflation were added to the calculation. You waited 25 years holding … Read the rest of this article!