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The $5 billion loss is likely pocket change to him. But he might be onto something. Which means, does he know some insider knowledge that we don’t? The airlin

The $5 billion loss is likely pocket change to him. But he might be onto something. Which means, does he know some insider knowledge that we don’t? The airlines industry is practically about tourism. Yes, there is business travel, but tourism is an important part of it. But, there is unlikely to be any significant tourism in the years ahead, until some kind of vaccine comes out. So, does he know about some insider knowledge here. He doesn’t take strategic positions like this on a whim, and he clearly operates on fringe insider knowledge. Maybe his buddies are telling him, that here will likely never be a vaccine? Now, that is an interesting and possibly tradable thesis. Short the airline companies.

tankenmate 6y ago
I would suspect that even after a vaccine comes out travelling of all sorts will be depressed; maybe to the point of permanently moving the needle. As an analogy, public health experts suggest we should do away with shaking hands in the future. It may well be that social norms such as travelling, shaking hands, etc will permanently change.
- blackrock 6y ago
  Depressed travelling has some interesting plays here. This means that AirBnB is dead. And all those people that bought multiple houses, with multiple mortgages, which they can no longer service, are going to go bankrupt. Good riddance. You can’t short AirBnB, but what other companies can you short? The loan processing companies? Zillow? BofA?
  - mxschumacher 6y ago
    that the tourist sector is in trouble isn't exactly a secret at this point, so additional shorts seem risky. Avis Budget, a car rental company, does 2/3 of their rentals at airports and they carry a huge amount of debt. The car rental space is extremely competitive as it is and new ride sharing offers don't make things easier. Hertz is already very close to bankruptcy
    - tankenmate 6y ago
      And completing the circle Warren Buffet has a relatively famous saying, "After all, you only find out who is swimming naked when the tide goes out."[0] [0] Berkshire Hathaway Chairman's Letter (2001)
shakopeeant 6y ago
People will be back on a plane and vacationing as soon as things open up. Just like people crowded the bars in Wisconsin as soon as they opened up. A loud minority of scared people is what you are hearing in the media. I have two vacations planned already.
tc313 6y ago
I doubt that he has any special knowledge that provides an edge; nobody knows what the fallout will be from all of this or when/if a vaccine will be developed. More likely, he’s just thinking about the same facts differently than others. Buffett tends to be quite cautious with regards to potential catastrophic failures, so he’s probably more focused on all of the ways that airlines, banks, etc. might lose a ton of money rather than worrying about missing out on the recovery.

tankenmate 6y ago

I would suspect that even after a vaccine comes out travelling of all sorts will be depressed; maybe to the point of permanently moving the needle. As an analogy, public health experts suggest we should do away with shaking hands in the future. It may well be that social norms such as travelling, shaking hands, etc will permanently change.

blackrock 6y ago
Depressed travelling has some interesting plays here. This means that AirBnB is dead. And all those people that bought multiple houses, with multiple mortgages, which they can no longer service, are going to go bankrupt. Good riddance. You can’t short AirBnB, but what other companies can you short? The loan processing companies? Zillow? BofA?
- mxschumacher 6y ago
  that the tourist sector is in trouble isn't exactly a secret at this point, so additional shorts seem risky. Avis Budget, a car rental company, does 2/3 of their rentals at airports and they carry a huge amount of debt. The car rental space is extremely competitive as it is and new ride sharing offers don't make things easier. Hertz is already very close to bankruptcy
  - tankenmate 6y ago
    And completing the circle Warren Buffet has a relatively famous saying, "After all, you only find out who is swimming naked when the tide goes out."[0] [0] Berkshire Hathaway Chairman's Letter (2001)

shakopeeant 6y ago

People will be back on a plane and vacationing as soon as things open up. Just like people crowded the bars in Wisconsin as soon as they opened up. A loud minority of scared people is what you are hearing in the media. I have two vacations planned already.

tc313 6y ago

I doubt that he has any special knowledge that provides an edge; nobody knows what the fallout will be from all of this or when/if a vaccine will be developed. More likely, he’s just thinking about the same facts differently than others. Buffett tends to be quite cautious with regards to potential catastrophic failures, so he’s probably more focused on all of the ways that airlines, banks, etc. might lose a ton of money rather than worrying about missing out on the recovery.