Warren Buffett: 'American Magic' Will Spur US Economic Recovery USA
WASHINGTON: Investor Warren Buffet said Saturday that he is confident that the U.S. economy will recover from its beating from the coronavirus pandemic because American magic has always prevailed.
The 89-year-old man made the optimistic prediction about the world's largest economy as his holding company. Berkshire Hathaway reported first-quarter net losses of nearly $ 50 billion.
He also announced Saturday that his company had sold all of its stakes in four major U.S. airlines last month, as the pandemic hit the travel industry.
Turns out he was wrong, he said of his acquisitions of a 10 percent stake in American Airlines, Delta Air Lines, Southwest Airlines and United airlines .
Berkshire Hathaway had paid $7 billion to $8 billion, and "we did not take out anything like that," he said.
Between the purchases that took place over months, and the sale, "the airlines business I think changed in a very major way" and could no longer meet Berkshire criteria for profitability, he said.
Buffett's announcement may further harm airlines that have already been pushed to the brink by coronavirus-blocking measures, which are now seeking the United States government for $ 25 billion in aid funds.
Berkshire Hathaway, based in Omaha, Nebraska, called its first-quarter setback temporary but said it could not reliably predict when its many businesses would return to normal or when consumers would resume their former buying habits.
We have faced great problems in the past, we have not faced this exact problem; in fact, we have not faced anything that closely resembles this problem, Buffett said in a long speech on the country's economic history.
"But we faced tougher problems, and the American miracles, American magic has always prevailed and it will do so again."
"We are now a better country, as well as an incredibly more wealthy country, than we were in 1789... We got a long ways to go but we moved in the right direction," he said, referencing the abolition of slavery and women's suffrage.
Never bet against the United States.
Buffett is considered one of the savviest investors anywhere. His fortune of $72 billion is the fourth-largest in the world, according to Forbes, and in normal years, the company's annual gathering in Omaha is a high-point of the calendar for investors, a "Woodstock for capitalists."
But the devastating economic impact of the pandemic has hit hard at Berkshire Hathaway 's wide range of investments, and the need for social distancing forced it to hold the annual meeting online.
Buffett addressed his shareholders in a live broadcast flanked only by Gregory Abel, who is in charge of Berkshire's non-insurance operations.
His business partner for six decades, Charlie Munger, 96, did not appear.
Buffett, in a statement, played down his company's bleak-looking net figure. He said a better measure of the company's performance was its operating earnings, which exclude investments and are less subject to sharp fluctuations.
By that measure, Berkshire Hathaway saw growth to $ 5.9 billion from $ 5.55 billion a year earlier.
The brutal drop in the net -- to a loss of $49.75 billion from a profit last year of $21.7 billion -- resulted primarily from the virus-related decline in value of its broad investment portfolio, which ranges from energy to transport to insurance and technology.
The annual meeting often has an almost carnival atmosphere, as thousands of fans and investors flock to Nebraska to hear from the celebrated "Oracle of Omaha." Buffett, famous for his relatively modest lifestyle, turns 90 on August 30.
In documents filed Saturday, Berkshire noted that until mid-March many of its companies were posting "comparative revenue and earnings increases" over the same 2019 period.
Many of its companies -- including in rail transport, energy production and some manufacturing and service businesses -- are deemed essential and are able to continue working amid the far-reaching confinement orders.
But its turnover decreased considerably in April, according to the company statement.
Moves taken by those companies such as employee furloughs, salary cuts and reductions, and capital spending reductions are "necessary actions" and "temporary," it said.