Will Airlines Fail

The Financial Times just released one of the biggest articles and front pages of the decade.  Yes, it is a decade changing event, because it shows one of the greatest minds in the world making a financial move that will resonate and possibly fortel the future of the American Economy.  The headline today read, “Warren Buffet Sells Stake in All US Airlines”.   This is life changing and in a way honestly sad.  This move comes on the brink of the pandemic and it looked like the American Markets were starting to gain confidence.  Most States have put out a plan for opening back up their local economies and the stay at home lockdowns are coming to an end here in a week or two for most of the country.  This has taken out the stock market on a bit of an up swing and most of us thought that the country was going to be on the right track. 

Now, we see that one of the world's greatest minds and best investors of all time has shown his hand.  He has sold all of his stock in the airline industry.  This singles that he thinks they are most likely going to be going out of business, bankrupt, or in line for a future bailout from the government.  So will the airlines stocks crash to zero and disappear.  Most likely not.  This is going to be another too big to fail moment if Warren Buffet is right and their stocks plummet.  The bailout or government takeover would have to happen. Our country cannot be without air travel as it would shutdown the economy all by itself.  But what is even scarier is what Mr. Buffet told Berkshire Hathaway.

Warren Buffet has told Berkshire Hathaway not to buy any stocks.  American FX Capital another market research company which is known to short the market well in crashes seems to also be lining up for another market fall.  Which goes along with Warren not only selling all his airlines stock, but he also is signalling to his investors that they should not be in the market at all.  He thinks even after a 30% market crash that the market has a lot father to fall.  

This means that our economy which is already in a recession, may be in line for the great recession of our time.  We though 2008 was the worst shape our economy would ever be in, but Warren Buffet is signalling that the worst is literally yet to come. As usual we are not giving financial advice only talking about the market as we see it.  Please see a broker, local investment firm, or attorney for financial advice.