WSJ
Updated May 2, 2020 10:28 pm ET
Warren Buffett offered reassurance at Berkshire Hathaway Inc.’s annual meeting Saturday that the U.S. economy will recover steadily from the coronavirus pandemic.
Speaking onstage at an empty arena in downtown Omaha, Neb., Mr. Buffett said the range of possibilities from the pandemic was wide, but it had significantly narrowed in recent weeks.
He said it now seemed unlikely the world would face the worst possible health and economic scenarios from the novel coronavirus, compared with some of the predictions made earlier this year. Moreover, the U.S. economy will recover with time, Mr. Buffett said.
“We’ve faced tougher problems, and the American miracle, the American magic, has always prevailed,” he said in livestreamed remarks, adding that it would do so again.
Despite Mr. Buffett’s confidence in the economy’s ability to overcome obstacles over time, he said it is hard to factor in an unpredictable event like a pandemic on markets, and he underscored his policy of not using borrowed money for investments.
“You can bet on America, but you are going to have to be careful on how you bet. Simply because markets can do anything,” he said.
Mr. Buffet said Berkshire sold about $6.5 billion of stock in April.
Much of those sales were shares of airline companies, Mr. Buffett said. Berkshire had significant holdings in four of the largest carriers in the country— United Airlines Holdings Inc., American Airlines Group Inc., Delta Air Lines Inc. and Southwest Airlines Co. It sold its entire stake in each company.
“When we sell something, we sell our entire stake,” he said.
Mr. Buffett added that the coronavirus crisis has changed the business in a dramatic way through no fault of the companies’ management.
“The airline business has the problem that if the business comes back 70% or 80%, the aircraft don’t disappear,” he said. “The world changed for airlines.”
Mr. Buffett also said he was personally looking forward to flying again, though he “may not fly commercial.”
Inside Berkshire, Mr. Buffett said earnings would be less overall for the company, but the conglomerate’s largest businesses—insurance, railroads and energy—are in decent shape and will continue to produce cash.
Saturday’s meeting was stark in contrast to most years.
Typically, thousands of people flock to Omaha each year for the Berkshire meeting, filling a venue that seats nearly 20,000 and many of the city’s hotels. These Berkshire shareholders come to buy products from the host of companies held in the conglomerate—from Geico and Fruit of the Loom to See’s Candies and Brooks Sports—and hear from Mr. Buffett and Charlie Munger for hours.
But because of the coronavirus pandemic, only Mr. Buffett and Greg Abel, Berkshire’s vice chairman of noninsurance operations, were physically present at this year’s meeting. The two took shareholder questions chosen by a group of handpicked journalists. |
