Warren Buffett dumps airline stocks like hot coals even as he defends their Ponzi schemes he gorges on
Warren Buffett’s Berkshire Hathaway has dumped stocks after ‘retail investors’ inflated a grotesque tech bubble with stratospheric valuations. Did the Federal Reserve or US Treasury announce they’re buying?
Each year, 40,000 shareholders make a pilgrimage to hear Warren Buffett speak at the annual shareholder meeting of his mega-conglomerate Berkshire Hathaway, an event famously dubbed ‘Woodstock for capitalists.’ The critical takeaway from Warren Buffett’s four-hour monologue at this year’s virtual meeting was Berkshire’s record hoard of cash, around $145 billion. This uninvested capital should scare the pants off investors. Why? Because in Buffett’s view, the real crisis is yet to come.
I never thought I’d agree with Musk, but he’s right Tesla is in a huge BUBBLE... & St. Elon’s playing investors like a fiddle I never thought I’d agree with Musk, but he’s right Tesla is in a huge BUBBLE... & St. Elon’s playing investors like a fiddle
The USA has no consumer demand, and all assets are overvalued – a fact that Buffett has come to recognize. For example, realizing that Berkshire’s airline positions were a mistake, Buffett has sold all of the company’s airline stocks. Buffett also has a negative view of government bonds, commenting that they are the worst investment out there.
At current valuations, Buffett’s not buying, I’m not buying and neither should you.
Warren Buffett appears to be a folksy, Cherry Coke-sipping, kindly investor, but appearances can be deceiving. Buffet’s Berkshire business model is to exploit his powerful connections in Washington DC to profit on government-guaranteed bailouts. No one in the universe exemplifies the “do as I say, not as I do” preachy adage more than Buffett.
Remember when Buffett called derivative products the tools of massive financial destruction?
Well, the ukulele-playing Buffett was actively selling massive amounts of derivative products during and after the 2008 credit crisis. The Wall Street, Washington, and Westminster elites crafted a narrative and their tone-deaf, multimillionaire Hollywood stooges began to propagandize and amplify that same narrative.
In 2008, for example, Buffet made huge risk-free profits from the government-backed “bailouts” of Bank of America, Goldman Sachs and Harley Davidson. Berkshire was there with its ladle, ready to skim the cream off the top as the taxpayers suffered.
The business-bankrupting share buyback schemes that airlines, as well as a number of other companies, utilize are another example. Buffett, a long-time airline skeptic, invested when they began paying dividends and doing buybacks. Once the airlines were forced to stop doing share buybacks, Berkshire dumped all of its holdings in airlines. Airlines were not all Berkshire was selling. Buffett has been sitting on at least $145 billion in cash because many stocks have never been more overvalued in history – there’s nothing of value to buy.
The airlines had no appropriate governance. Airlines should have been strengthening their balance sheets rather than incurring massive amounts of corporate debt. Instead, they participated in a vast legal Ponzi scheme and conducted enormous stock buybacks that pushed stock prices higher and created an illusion of “financial health” by improving earnings per share. For example, Delta funneled dividends to fat cats like Berkshire, which ended up destroying the future value of Delta. And Delta’s not the only one. All of the airlines that participated in buybacks rather than building a sustainable business model are now facing the possibility of bankruptcy.
