https://www.forbes.com/sites/sergeikleb ... d5ddda5c74

He is selling up and getting out of Dodge. The industry seems to be a money eating monster. He got burnt very badly multiple times before but he kept coming back to Aviation and investing more despite public pronouncements that he is done with Aviation for ever more. There is something about the industry that distorts the ability to perceive of even the most hard-nosed investor.

I'm down about 50k on those shares at the moment.
I had thought that by buying in to Airbus instead of a Carrier I was diversifying my risk somewhat i.e you get rich in a Gold rush by selling pickaxes and spades, not prospecting; boy, was I wrong.
I have €5k to invest tomorrow morning and I'm done with aviation. With even the biggest of them struggling to survive the next 6 months the risks of complete and total wipeout are too great.

Anyhow, rather than making this all about myself my point is that Aviation and Civil Aviation in particular is capable of eating huge amounts of wealth and delivering nothing in return.
To those of you who see it as a hobby, interest or profession you should be thankful to all the misguided investors.

I’m just watching the Berkshire AGM on youtube. He says he can’t see air travel returning to previous levels for years. Part of the reason of the selling.

“We will not fund a company that — where we think that it is going to chew up money in the future.”

“Investors have poured money into a bottomless pit, attracted by growth when they should have been repelled by it.”

Here here. Aviation is tricky business, with little margin and they are the first to fade away when crisis hit.

leghorn wrote:

https://www.forbes.com/sites/sergeiklebnikov/2020/05/02/warren-buffett-sells-airline-stocks-amid-coronavirus-i-made-a-mistake/#53d5ddda5c74

He is selling up and getting out of Dodge. The industry seems to be a money eating monster. He got burnt very badly multiple times before but he kept coming back to Aviation and investing more despite public pronouncements that he is done with Aviation for ever more. There is something about the industry that distorts the ability to perceive of even the most hard-nosed investor.

I'm down about 50k on those shares at the moment.
I had thought that by buying in to Airbus instead of a Carrier I was diversifying my risk somewhat i.e you get rich in a Gold rush by selling pickaxes and spades, not prospecting; boy, was I wrong.
I have €5k to invest tomorrow morning and I'm done with aviation. With even the biggest of them struggling to survive the next 6 months the risks of complete and total wipeout are too great.

Anyhow, rather than making this all about myself my point is that Aviation and Civil Aviation in particular is capable of eating huge amounts of wealth and delivering nothing in return.
To those of you who see it as a hobby, interest or profession you should be thankful to all the misguided investors.

If you have 5K to invest tomorrow morning, I suggest that you watch the Berkshire AGM if you haven't.
WB is out of equity and into cash.

As for WB getting out of airlines, he is right to do it.
Solving the liquidity problem with loans doesn't solve the insolvency/bankruptcy risk.

If you have to appraise an airline today that owns significants assets in the form of aircraft and/or real estate (gates) or intangibles (slots), but has little net assets, you may actually be looking at an insolvent airline, considering plummeting aircraft valuations, commercial real estate valuations and slot valuations.
In theory if this goes on for 6-12 months, most airlines could be insolvent.

If this goes on for years, people are going to find new ways to travel longer distances at high speeds.




https://www.flickr.com/photos/meteorry/8373269790

This may be a minority view but buying shares to get rich is pretty dubious ethically. At the extreme, we have thousands of people who just move money around, creaming off a percentage here and there, but who don't contribute anything to the common good.

Wasn't it shareholder value, short-term profits, and so on that got Boeing into trouble?

I'd like people to do an honest day's work for an honest wage than to buy shares in the hope and expectation that they can sell them later at a profit.

I do hope that capitalism doesn't survive the current crisis.

But, of course, it will. It always does.

PM wrote:

This may be a minority view but buying shares to get rich is pretty dubious ethically. At the extreme, we have thousands of people who just move money around, creaming off a percentage here and there, but who don't contribute anything to the common good.

Wasn't it shareholder value, short-term profits, and so on that got Boeing into trouble?

I'd like people to do an honest day's work for an honest wage than to buy shares in the hope and expectation that they can sell them later at a profit.

I do hope that capitalism doesn't survive the current crisis.

But, of course, it will. It always does.

This is an example of uninformed virtue signalling. If you have a pension fund then you are in the game too.
I'm buying shares in a hope of being able to provide for myself and a hope that they'll retain worth. I'm not doing this lightly but have been forced in to it as interest rates are null or negative, the value of money is being undermined by quantitative easing, bail in laws for bank accounts and my pension fund has been raided by government in the past.
Get down off your soapbox there now.

I think Buffets also worried he’ll be tapped for capital by the airlines.

Not being familiar with bankruptcy laws in the US, does buffet stand to lose if they enter this protection?

leghorn wrote:

PM wrote:

This may be a minority view but buying shares to get rich is pretty dubious ethically. At the extreme, we have thousands of people who just move money around, creaming off a percentage here and there, but who don't contribute anything to the common good.

Wasn't it shareholder value, short-term profits, and so on that got Boeing into trouble?

I'd like people to do an honest day's work for an honest wage than to buy shares in the hope and expectation that they can sell them later at a profit.

I do hope that capitalism doesn't survive the current crisis.

But, of course, it will. It always does.

This is an example of uninformed virtue signalling. If you have a pension fund then you are in the game too.
I'm buying shares in a hope of being able to provide for myself and a hope that they'll retain worth.
Get down off your soapbox there now.

And pension funds are part of the problem. The whole system is rotten. That's why...

"I'm not doing this lightly but have been forced in to it as interest rates are null or negative, the value of money is being undermined by quantitative easing, bail in laws for bank accounts and my pension fund has been raided by government in the past."

You're a victim in this too. It's the system that is wrong. Not you.

Good discussion. Most of you have probably read my 'by line' on the bottom line. And as to corporate ethic, economics and finance. The old Boeing was an engineering company. The companies that survive and do well will not just be those that satisfy Wall Street. Boeing to survive needs to be a company with a passion for earning money by making the world's best planes (and likewise Airbus, for kind of different reasons). I plan on getting a Cyber Truck, not because Tesla is worth so much to Wall Street, but because Musk has a passion for building the best cars in the world. Ford did build the best truck, they better wake up.

So I wonder how he feels about his NetJets and Flight Safety investments?

PM wrote:

This may be a minority view but buying shares to get rich is pretty dubious ethically. At the extreme, we have thousands of people who just move money around, creaming off a percentage here and there, but who don't contribute anything to the common good.

That is what ALL savings type programs/ plans are. Unless you plan to put your money in a cookie jar and hope it is worth something when you are too old to work, you invest in some scheme where other people use your savings to 'make money' from the efforts of others.

Investing in a bank, or a local savings and loan (are there any left in the US?) is people pooling their money to loan it to other people, hoping those people pay back more money than was loaned to them.

As far as getting rich, I doubt most people expect to do that. They try to keep the combined value of their investments ahead of what they have invested as higher costs increase the cost of living. Yes, we all marvel at the few that make really big money in investing. Most just hope to be comfortable in retirement. To even be able to retire without being forced to continue working until their dying day.

rfields5421 wrote:

PM wrote:

This may be a minority view but buying shares to get rich is pretty dubious ethically. At the extreme, we have thousands of people who just move money around, creaming off a percentage here and there, but who don't contribute anything to the common good.

That is what ALL savings type programs/ plans are. Unless you plan to put your money in a cookie jar and hope it is worth something when you are too old to work, you invest in some scheme where other people use your savings to 'make money' from the efforts of others.

Investing in a bank, or a local savings and loan (are there any left in the US?) is people pooling their money to loan it to other people, hoping those people pay back more money than was loaned to them.

As far as getting rich, I doubt most people expect to do that. They try to keep the combined value of their investments ahead of what they have invested as higher costs increase the cost of living. Yes, we all marvel at the few that make really big money in investing. Most just hope to be comfortable in retirement. To even be able to retire without being forced to continue working until their dying day.

Wouldn't it be better if governments ensured various safety nets to protect people from unemployment, old age, illness, etc.? Some governments seem able to do it quite successfully. Others ... less so.

PM wrote:

Wouldn't it be better if governments ensured various safety nets to protect people from unemployment, old age, illness, etc.? Some governments seem able to do it quite successfully. Others ... less so.

The math of a government safety net requires that the number of people contributing to the safety net by working increases continually in-order to provide the funding to supports those others.

Inherent also in the process is the raising of the retirement/ old age if the rate of increase of the number of contributing workers decline. As health care improves, and longevity improves - the 'old age' number rises. Those over the traditional retirement age are forced to continue working as long as their health allows them to work. It is essential if the 'safety net' is to survive long term.

ALL safety net costs come from the taxes on people WORKING today. Companies do not pay taxes - their customers, the buyers of their goods, the users of their service pay the taxes.

Unemployment is supposed to be a temporary condition. If the skills of the worker are insufficient to obtain employment in the current job market, any safety net REQUIRES that person to return to a contributing working role as soon as possible. Either through retraining or acceptance of a position in a different skill area and a lower salary than previously. The only acceptable reason for continued unemployment is disability/ long term illness. Even if the only work available for the unemployed is picking up trash thrown in public places by the inconsiderate. That is not a demeaning job. It is a positive contribution to the public good.

But companies must have economic incentives to HIRE people. Even 'over qualified' people. And economic penalties if they decrease the size of the labor force. Otherwise the company is transferring the costs of supporting displaced/ redundant workers onto the general public. I submit that a company should have no economic advantage in transferring such 'reduced labor' costs to the public sector in order to profit the investors.

I will admit the US based health care for profit system is a joke. Why the people of a supposed 'leader' of the world economy consider the profits of insurance companies and mega-sized medical companies more important than the efficient delivery of health care to the needy is beyond me.

Why people are willing to accept the restrictions placed upon them by unreasonable health insurance plans, I simply do not understand. The average private insurance US worker has less freedom about choosing access to a doctor, less freedom about getting specialty referrals, less access to realistic cost medicines - that most people in Europe or other developed nations.

I'm fully aware that my views are conflicting with the way that I've lived the last 50+ years of my working life. It took me many years to understand how the system is rigged to push the costs of my life onto my children and grandchildren and someday great-grandchildren.

That's also how the world worked before there were safety nets. No 'old age' retirement. No expensive health care.

The simple fact that I'm nearing age 70, and most of my current friends and acquaintances in my social circles are actually older than me, means a safety new with retirement at age 65 is financially unsustainable. Most of my friends and I COULD work. If we had to support ourselves, rather than taking 'safety net' retirement payments to allow us to CHOOSE to not work.

Much of that is choosing to spend personal savings upon my chosen post-working lifestyle, rather than investing that money in my grandchildren.

rfields5421 wrote:

PM wrote:

Wouldn't it be better if governments ensured various safety nets to protect people from unemployment, old age, illness, etc.? Some governments seem able to do it quite successfully. Others ... less so.

The math of a government safety net requires that the number of people contributing to the safety net by working increases continually in-order to provide the funding to supports those others.

Inherent also in the process is the raising of the retirement/ old age if the rate of increase of the number of contributing workers decline. As health care improves, and longevity improves - the 'old age' number rises. Those over the traditional retirement age are forced to continue working as long as their health allows them to work. It is essential if the 'safety net' is to survive long term.

ALL safety net costs come from the taxes on people WORKING today. Companies do not pay taxes - their customers, the buyers of their goods, the users of their service pay the taxes.

Unemployment is supposed to be a temporary condition. If the skills of the worker are insufficient to obtain employment in the current job market, any safety net REQUIRES that person to return to a contributing working role as soon as possible. Either through retraining or acceptance of a position in a different skill area and a lower salary than previously. The only acceptable reason for continued unemployment is disability/ long term illness. Even if the only work available for the unemployed is picking up trash thrown in public places by the inconsiderate. That is not a demeaning job. It is a positive contribution to the public good.

But companies must have economic incentives to HIRE people. Even 'over qualified' people. And economic penalties if they decrease the size of the labor force. Otherwise the company is transferring the costs of supporting displaced/ redundant workers onto the general public. I submit that a company should have no economic advantage in transferring such 'reduced labor' costs to the public sector in order to profit the investors.

I will admit the US based health care for profit system is a joke. Why the people of a supposed 'leader' of the world economy consider the profits of insurance companies and mega-sized medical companies more important than the efficient delivery of health care to the needy is beyond me.

Why people are willing to accept the restrictions placed upon them by unreasonable health insurance plans, I simply do not understand. The average private insurance US worker has less freedom about choosing access to a doctor, less freedom about getting specialty referrals, less access to realistic cost medicines - that most people in Europe or other developed nations.

I'm fully aware that my views are conflicting with the way that I've lived the last 50+ years of my working life. It took me many years to understand how the system is rigged to push the costs of my life onto my children and grandchildren and someday great-grandchildren.

That's also how the world worked before there were safety nets. No 'old age' retirement. No expensive health care.

The simple fact that I'm nearing age 70, and most of my current friends and acquaintances in my social circles are actually older than me, means a safety new with retirement at age 65 is financially unsustainable. Most of my friends and I COULD work. If we had to support ourselves, rather than taking 'safety net' retirement payments to allow us to CHOOSE to not work.

Much of that is choosing to spend personal savings upon my chosen post-working lifestyle, rather than investing that money in my grandchildren.

I would love to sit and have a beer with you (maintaining appropriate social distancing, of course!) as I think we are not that far apart. I'm in denial about "nearing 70" but I am 64... And I'm not American and don't live there and and, for the reasons you give, I'm grateful.

Put very simply (not to say - before you do - simplistically!), there is quite enough wealth in the world to give everyone an adequate standard of living, a good education, decent health care, and a pension. Obviously, it's not easy but, if the will was there, we'd manage without the super-rich billionaires and their super yachts.

It goes way beyond raising taxes. It will require a complete reassessment of what constitutes 'work'. It will need a thorough rethink of the relationship between citizens and government. It will demand a different relationship between central and local government. The whole point of businesses will be to be reconsidered. Are their loyalties to shareholders or employees or the environment or what? Inherited wealth and privilege will need to be questioned. Spending money on F-22s and submarines rather than schools and hospitals - does that make sense?

Right now and all over the world, everyone is praising the selfless work of nurses. Yet in virtually every developed country (certainly my own, the UK) we've been happy to pay nurses barely a living wage for years. Illegally, I went out on strike in the 1980s in support of higher salaries for nurses.

The system doesn't work and it's unsustainable.

(I'll buy the beer...)

There is no solution because there is no way the entire economy can be rebalanced.

I disagree there is enough wealth in the world. While maybe for a quick fix, it is unsustainable in the long run.

I have no problem with the billionaires, at least those like Gates, or similar who actually made their money by providing something of value. Nor inherited wealth, provided taxes were paid on the money when it was made. But I've also seen too many, well over a hundred personally, family operated businesses destroyed due to taxes on estates, capital gains after the original generation dies.

Inherited wealth must be used to create new economic opportunities, or it disappears in two generations. If the younger generation does not learn how to work and 'make money' the inherited wealth decreases during their lifetime, and their children has 'less' wealth.

What I do have a huge problem with is the 'salary' of high level international corporate executives. Mainly because such levels of compensation are not subject to review or competition. The idea that a corporate board provides review and supervision of such executives is a JOKE.

And many of the ideas require a world where religious, national, ideological strife does not exists. Where leaders are not comfortable with their people living on the economic edge of ruin. Part of being 'old' is that it is extremely difficult to maintain hope that the world will improve. Because my view of the years of my life and history is that the 'Golden Age' was never as golden as people think it was, and the future is rather bleak.

Because humans still operate on a very instinctual level of 'I'm better than you' and 'I and mine deserve more than you'.

We think on a family/ tribal level when it comes to base issues of survival, not even on a large community level. Barely on a national level, and most are simply incapable of thinking of others around the world as anything close to equal.

BravoOne wrote:

So I wonder how he feels about his NetJets and Flight Safety investments?

I watched the full AGM, no single mention of Netjets, seems very convenient.

With Netjets, the capital cost of aircraft is derisked and carried by the fractional owners, in theory.
So in terms of the big capital portion, Netjets should be ok in the short-term, ie 3-6 months.
The problem is where shares come to the end of their terms. Fractional ownership is usually for a term of less than 5 years, so on any given month, they should have dozens of shares coming to the end of their term. Most will undoubtly opt out and not renew the contract in the current situation. Netjets then has to give them their portion of the residual capital back, which can be in the millions per aircr

It's manageable for several months, but if this continues for years, all they end up with is a grounded fleet and bleeding capital.
Still manageable with 120+ billions in liquidity for the entire holding company, but all of their businesses are beiing hit, so it's not just Netjets.


I'm worried about Warren Buffett saying that the US can't default because it can print its way out of debt as long as bonds are issued in their own currency, so he found that the credit rating downgrade by Standard & Poor's is nonsense. I think that the real risk is not per se defaulting, but inflation resulting in rising bond yields and interest rates, making it difficult to sell new debt. That will in turn make it more expensive to service old debt, resulting in a spiralling inflation.

I also think that the problem will be that this event will be deflationary for Wall street, corporations and businesses (ie revenues are stopping), but inflationary for main street (they keep receiving money but will have less opportunities to spend it or will choose to spend less).
So while printing money solves the problem for the companies by maintaining their status quo in preparation of relaunch, the inflation for main street can spiral out of control because that's ll that's left of the economy, ie people consuming and selling stuff directly to eachother.

I wasn't worried about my pension until I read about Warren's vacuum suck.
I did early out, my pension doesn't start for 5 years. It will be a miracle if I see half of my pension.
This will be Deja Vue all over again with UA and AA retiree's who ended up with half their pension in bankruptcy. Hopefully, Warren is wrong.

just remember the old saying sell in May and go away

Perhaps this will give the US aviation industry a chance to reset? The airlines have been a joke for some time now. Customer service is non-existent. Anyone who has flown with an Asian or Middle Eastern airline will know that the US airlines are third world in almost all aspects. Hopefully, management can take this opportunity and do a complete revamp of the staff... but this may be too hopeful.

Elite wrote:

Perhaps this will give the US aviation industry a chance to reset? The airlines have been a joke for some time now. Customer service is non-existent. Anyone who has flown with an Asian or Middle Eastern airline will know that the US airlines are third world in almost all aspects. Hopefully, management can take this opportunity and do a complete revamp of the staff... but this may be too hopeful.

This is such an over-the-top ridiculous statement. I've flown airlines all around the world and the US carriers the past few years have been pretty top-notch in my experience. About the only laggard in my opinion has been American, but honestly my flights with DL, UA, WN, and AS have always been great...both hard and soft product compared to many of their international peers.

This is a poignant personal interest story, because Buffet, a genius, already knew airlines were a crap investment. Structurally. They suffer horrible cyclical swings, and carry horrible inflexibilities. Insanely expensive aircraft commitments. Exorbitant staff costs and contracts (most industries are at-will employment - works a lot nicer for shareholders). Plus the industry is very competitive and open to new entrants. None of this mixes well.

Buffet's handlers convinced Buffet "this time it's different." He was seduced!

But he was right all along!!!! Airlines are, structurally, a terrible investment that deserves very low multiples. But I believe airlines are an honorable professional field full of great people. I am a true industry fan and I love to fly. Just don't buy the stock.

flyguy89 wrote:

Elite wrote:

Perhaps this will give the US aviation industry a chance to reset? The airlines have been a joke for some time now. Customer service is non-existent. Anyone who has flown with an Asian or Middle Eastern airline will know that the US airlines are third world in almost all aspects. Hopefully, management can take this opportunity and do a complete revamp of the staff... but this may be too hopeful.

This is such an over-the-top ridiculous statement. I've flown airlines all around the world and the US carriers the past few years have been pretty top-notch in my experience. About the only laggard in my opinion has been American, but honestly my flights with DL, UA, WN, and AS have always been great...both hard and soft product compared to many of their international peers.

Is it? I find it hard to believe that the hard and soft product of the aforementioned airlines can compare with their international peers, especially as I mentioned the ones in the Middle East and Asia. While it may be subjective, the general attitudes of customer service staff, check-in agents, and flight attendants in the US are what I consider a lot "less friendly" than one would experience elsewhere.

This is likely to open a can of worms as it touches many other sensitive topics. But a general shake up of the industry will be good. I hope they improve their soft product to be more competitive globally.

rfields5421 wrote:

The math of a government safety net requires that the number of people contributing to the safety net by working increases continually in-order to provide the funding to supports those others.

Inherent also in the process is the raising of the retirement/ old age if the rate of increase of the number of contributing workers decline. As health care improves, and longevity improves - the 'old age' number rises. Those over the traditional retirement age are forced to continue working as long as their health allows them to work. It is essential if the 'safety net' is to survive long term.

India has a much higher proportion of working age people than e.g. European countries. It mostly depends on productivity. It also depends how much a society is willing to redistribute.
In Germany government expenses are mostly paid for by a rather small percentage of high tax payers. More important are social insurance expenses, old age, health, unemployment. These are paid half by employees and half by employers. I think that's a good arrangement.
That people get older and are longer healthy indeed requires later retirement.

rfields5421 wrote:

If the skills of the worker are insufficient to obtain employment in the current job market, any safety net REQUIRES that person to return to a contributing working role as soon as possible. Either through retraining or acceptance of a position in a different skill area and a lower salary than previously. The only acceptable reason for continued unemployment is disability/ long term illness. Even if the only work available for the unemployed is picking up trash thrown in public places by the inconsiderate. That is not a demeaning job. It is a positive contribution to the public good.

If the government finances lazy people a life on the balcony, salaries for unqualified labor increases strongly.
I believe in exchange restrictions in the freedom of family planning are required. But the German working classes had a good life as long as lazy people were fed by government. Ironic enough a lot of people in the low income group were quite hostile and envious about these lazy people. It's exactly that envy that makes sure an employer has to pay considerable above the "balcony wage".
Fears that there will be large scale abuse are unfounded in a consumption oriented society. In Germany it was only a few percent of workforce and many of them had mental and other problems.

It also works the other way. The German Wikipedia says that employment increases, but wages fall under "Earned income tax credit". As source it gives this
50 page pdf in english: https://web.archive.org/web/20060620224 ... idence.pdf
I read only a few pages.
"Targeted at low-wage workers, the EITC has focused on achieving two major goals:
distributing income towards low-wage workers, and increasing labor force participation
rates. But there is most likely a tension between these objectives. If the EITC induces a
net increase in labor supply, then unless labor demand is perfectly elastic, the equilibrium
wage will fall. Furthermore, if EITC-eligible and EITC-ineligible employees compete in
the same labor market, a fall in the equilibrium wage will affect both groups. On net,
ineligible workers will therefore be worse off than if the EITC had not been increased. "

I believe government support for lazy (but sterilized) people together with Earned Income Tax Credit would be a workers' paradise.

German trade surplus getting out of control happened after cancellation of the "money for nothing" policy. Productivity kept increasing, but wages increased far less.

PM wrote:

Put very simply (not to say - before you do - simplistically!), there is quite enough wealth in the world to give everyone an adequate standard of living, a good education, decent health care, and a pension. Obviously, it's not easy but, if the will was there, we'd manage without the super-rich billionaires and their super yachts.

I'm afraid I have to disappoint you.
It would be very easy to reintroduce Roosevelt's banking regulation. But politicians have no interest to spit on the hand of their donors and later employers.
In a lot of places with housing shortage there is plenty of open land. But politicians have no interest to depress the prices.
The maths books of my son in India is pathetic. Why not copy an UK or US maths book? Because engineers are supposed to be smart enough to copy a fridge or a car, but not so smart as to enable Elon Musk type of businessmen to replace today's elite.
Do you know the name "Tata"? Gandhi wrote in "Satyagraha in South Africa" that a check of Tata arrived just in time. That's more than hundred years ago. The main industrial families haven't changed.

We also need billionaires, Elon Musk being the best example. In "The constitution of liberty" Hayek argues that new technology is always extreme expensive. There have to be very rich people who can afford to not think economical. Again Tesla comes to mind. There are several more excellent arguments with which Hayek celebrates inequality.
But that doesn't require working poor. Inequality yes, poverty no.

You are pessimistic? When was the world better? In the West it was maybe better for a few decades after WW2, but worldwide it was never better. Which I find quite surprising as I myself am quite frustrated with the corruption politicians show.

Sokes wrote:

We also need billionaires, Elon Musk being the best example. In "The constitution of liberty" Hayek argues that new technology is always extreme expensive. There have to be very rich people who can afford to not think economical. Again Tesla comes to mind. There are several more excellent arguments with which Hayek celebrates inequality.

For every billionaire that advances the world through research, there are ten billionaires, probably more, that will go to great lengths to stop innovation when it hurts their bottom line. We don’t need billionaires perse, we need people with the balls to go against chasing annual (or quarterly) results. If they have the financial means to do so, all the better.

A lot of the people that are now complaining at China, share the short term vision. China, on the other hand, looks long term. A completely different mind-set from the western view.

petertenthije wrote:

Sokes wrote:

A lot of the people that are now complaining at China, share the short term vision. China, on the other hand, looks long term. A completely different mind-set from the western view.

China's "long-term planning" has often resulted in the deaths and suffering of untold millions of people while setting them back even more on the world's stage. Long term planning like China likes to do isn't always a good thing.

So back on topic - Warren Buffett is no dummy, but even he and his team make mistakes. I posted last week to another thread in Civil Aviation that COVID has affected commercial airlines in significant and permanent ways. The "business as usual" crowd didn't like this, but then again they never like hearing the truth. The economic fundamentals of this business have shifted. On the one hand you have consumers who are finding that they have much less discretionary income (or none at all). On the other hand you have corporations which have been forced by COVID to use technology to replace travel. Many companies are now finding that virtual meetings are just fine and have been much more universally adopted than ever before. A significant portion of corporate travel is not coming back. That corporate travel was the bread and butter for the airlines, the hotels, rental cars, dining, etc.

For the airline industry, the old fare mix and revenue distribution models are gone. They are having to relearn the business all over again as the new domestic and global financial reality slowly evolves. Everything is being wiped clean in terms of cost, revenue and product. The entire experience is being reinvented because the old cost and revenue models no longer work. The product is now in the very early stages of being totally redesigned because the old customer experience (hard and soft products) no longer work. The airlines are going to hope that the government and CDC provides some framework from which to create a new baseline. That may or may not happen in time to save some companies.

Like it or not, some big well-known airlines are going to completely disappear, either through massive mergers or liquidations. Is it any wonder that WB wanted nothing to do with this industry during their relearning curve?

As to why Buffett is so cash heavy, a lot of people saw a bear market coming late last year, but we had novel coronavirus instead.