Warren Buffett 0:01
The American investor Warren Buffett says his Berkshire Hathaway group has sold all of its shares in the four largest us airlines. He said travel was likely to be much reduced in the next three to four years because of the Coronavirus pandemic. Well, Anthony pomp Leon O is the author of the pump letter, which looks at investing. And he watched Warren Buffett’s talk earlier. And Steve, good to see you. Thanks for being with us. So this not good line. Not good news for the airlines there at all.
Anthony Pompliano 0:31
Yeah, look, in 2016. When Buffett took the airline position, I think it surprised people he’d spent years kind of avoiding the airline investments. And then he owned about 10% in the four largest us airlines. And so getting rid of the decision today he was pretty intellectually honest and said that he had made a mistake. Obviously the Coronavirus has had a negative impact on us travel and that entire industry, and so they’ve exited the position and they’ll look elsewhere to put the cash as they continue to invest in Canada. uncertain times.
Warren Buffett 1:01
And obviously for people who don’t know, he’s a huge a titanic figure in the world of share buying and investing, or what else has he said today?
Anthony Pompliano 1:11
Yeah, his main message was basically, these are uncertain times. But He, along with many other investors believe that to never bet against America, right? his belief is, look, I don’t know how long this will last. I actually don’t know if the stock market’s going to go up or down, or how long that may take to get a full recovery.
But over long periods of time, betting against the United States is probably a bad bet. And so he’s still long America and will continue to kind of do what he’s done for the last number of decades. It served him well in the past and I along with many others think that will continue to serve him well moving forward.
Warren Buffett 1:47
Yeah, it certainly served him well in the past, isn’t it?
What about this apparent disconnect more widely between the state of the US economy and the stock market?
Anthony Pompliano 1:58
Yeah, you know, it’s very obvious that the US stock market is not a representation of the economy. It’s a representation of central bank actions, right? So what we’ve seen over the last couple of weeks is unemployment, GDP, everything’s going down all the kind of the economic data is going negative. But the stock market is rallying it’s there’s this dislocation between kind of the economic Carnage on the ground, and then what the stock investors are seeing.
And so at some point, I think that there has to be some continuity there, right, that there either has to be the stock market coming down to meet the reality, or the reality has to improve to kind of meet those expectations of stock investors. But there’s definitely a dislocation right now. And that’s being driven by the Central Bank, the Federal Reserve is printed, you know, three plus trillion dollars at this point, it doesn’t look like they’re gonna slow down. And so that money printing is definitely kind of inflating asset prices right now.
Warren Buffett 2:47
And you just looking at the economy more widely. What kind of time frames are you putting on
the recovery? How
long is this going to take?
Anthony Pompliano 2:57
Well, step one is the economy is not going to recover what he wants sitting at home, right, you’ve got to get people back to work safely, you’ve got to get them spending money again, consuming. So that’s kind of the first step. The second step then is, if anyone’s ever run a business before, you can’t shut down your business, send all of your employees home, tell all of your customers that you’re closed down, and then just start it back up on day one, and immediately have all your employees back and all of the customers back, right, it takes time to do that.
And so I don’t think that we’re going to kind of see this V shape recovery that some people are talking about. Instead, I think that this is going to take, you know, 12 to 18 months to kind of get people’s feedback underneath them. And then also, we’re gonna see a lot of businesses not come back right now the United States 50% of jobs are from small businesses. It wouldn’t surprise me to see 20% of small businesses in the US not make it through this economic downturn, which is really sad, but but I think that’s kind of the reality that we’re facing right now.
Warren Buffett 3:48
Yeah, huge times. Thank you very much for talking us through that Anthony pomp. Tiana, you got it.