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The finance wizard, who has always seen buying opportunities in collapses, this time remains in the window. Convinced that the worst is yet to come
by Enrico Marro
3 ‘reading
The Omaha Oracle, this time, does not shine with optimism. In a speech at the annual shareholders meeting of his Berkshire Hathaway, severely affected by the collapse of the markets (with losses of 55 billion dollars), Warren Buffett, who will be ninety round years old on August 30, reported the Your company’s financial position Giving some useful filigree advice to those who have ears to hear the ideas of the highest-value investor in history and the world’s third richest man.
1. The worst is yet to come in the markets. Obviously, this is the belief of the Omaha oracle, which currently maintains something like $ 137 billion in its Berkshire Hathaway cash, a record of liquidity. Unlike Lehman’s collapse in 2008, Buffett doesn’t find anything interesting to buy this time. Nothing, at least at these prices. Bad sign, especially for those who are already fantasizing about prodigious “V” shots of the stock exchanges. And for those who asked why keep liquid a mountain of money equivalent to the GDP of Kuwait or Hungary (park them in US government bonds. In short, and, consequently, see almost 2.7 billion dollars a year eaten away by the inflation) Warren replied placidly “It doesn’t seem like a lot to me if you think of the worst case scenario possible.” It should also be added that the Omaha Oracle had a good liquidity nest prior to the coronavirus emergence (equal to 127 billion), highly doubtful that Wall Street’s stellar valuations in late 2019 reflected the companies’ true value. publicly traded. .
2. Airlines will fly low. Buffett is famous because he generally never sells: As a good value investor who can take a look at the hidden gold nuggets, he buys the shares at the most favorable time and keeps them in the portfolio forever or almost. For airlines, this time, it made a historic exception. It sold everything, albeit at a loss: Delta, SouthWest, American and United, worth about $ 6 billion. “The world of air travel has changed,” Buffett explained, adding that he wished the best for these companies, who had parenthetically already had to deal with climate change and the Greta effect in 2019. The magician’s decision made a noise on Wall. Street, where other investors followed in sales, further pushing stocks already slapped by the markets in recent weeks.
3. Oil will harm the economy and finances. According to Buffett, at the levels it is at, or just above $ 20 a barrel, crude oil will cause great suffering to the sector and to banks, with 40% of US production that could shut off taps in the next three months. “Less than $ 37 a barrel, crude oil cannot sustain extraction costs,” explained the Omaha Oracle, adding that this can cause chain failures and, consequently, significant damage to the banking system as well. The hope is that sooner or later the price of a barrel will decisively point upward again, but Buffett does not feel able to make any predictions about it. There are too many unknowns in this crisis. And even a proverbial optimist like Warren took off his everlasting pink glasses, with which he could see at every stock market crash the opportunity to shop, wearing clothing more similar to that of an owl. “In the past two centuries we have overcome many obstacles – the finance wizard concluded – we will also overcome the coronavirus pandemic. Although we have never seen anything like this.”
