What’s Buffett saying?

Airport with many airplanes on the tarmac at sunset.
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At his company’s recent annual meeting, Warren Buffett defended his decision to sell all of Berkshire Hathaway’s airline holdings last year.

Until 2020, the company owned 9% to 11% stakes in American, Delta, United and Southwest Airlines. But when the pandemic hit, Berkshire Hathaway sold its holdings at a considerable loss.

He also decreased the company’s shares in JPMorgan Chase and Goldman Sachs last year.

At the meeting, some investors accused Buffett of being overly cautious.

Buffett said he doesn’t “consider it a great moment in Berkshire’s history” but he stands by his choice, despite the fact that those airline stocks have risen since.

As he sees it, the travel industry is still an iffy investment — especially since, in Buffett’s view, international and business travel are unlikely to resume anytime soon.

On top of that, Buffett has an inkling the airline industry wouldn’t have received any government bailouts early in the pandemic if his company hadn’t withdrawn its stake.

“I can just see the headlines now,” he said at this year’s meeting.

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As always, he may be onto something

Young smiling businessman working from home writing notes in notebook while using his laptop and wearing headphones around his neck.
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Buffett thinks it may take years for the airline industry to recover from the effects of COVID.

Many employers like Google, Ford and Target, aren’t aiming to move their corporate employees back to in-office work until July at the earliest. And close to half of the workforce is still working remotely full time, based on findings from Upwork.

And in the same report, Upwork anticipated the number of remote workers would nearly double over the next five years compared to what it was before the pandemic, with 36.2 million Americans working from home.

What does that mean for travel? The pandemic has revealed that virtual meetings can be just as productive and way more cost-effective than putting employees on a plane and putting them up in hotels.

A study from IdeaWorks reveals that between 19% and 36% of business travelers will not be returning to the skies after the pandemic is over.

The rationale for that varies, with some reporting they’ll instead be working completely from home, they can rely on virtual options like Zoom or Microsoft Teams for more things or their risk profile has changed.

What to do if Buffett is right

Close crop of woman working on laptop, planning budget with papers.
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We may not be returning to business or international travel as quickly or as fully as we’d hoped, but even if that’s disappointing, it gives you a little extra time to save up for an even better trip after the pandemic.

Here are a few ideas to fill out your travel fund:

  • Turn your pennies into your profits. You don’t have to have Buffett’s $100 billion net worth to make investing work for you. Using a popular app you can automatically invest your "spare change”, and build a diversified portfolio by rounding up all your purchases to the nearest dollar. (And of course, if you want to follow Buffett’s lead, you can always leave out airline companies from your list of investments.)

  • Cut the cost of your debt. Has your credit card been carrying you through the pandemic? Get your debt organized — and make it more manageable — by folding your balances into a single debt consolidation loan at lower interest.

  • Save everytime you shop. Take the work out of finding the best prices on your everyday purchases. Download a free browser extension that automatically scours for better prices and coupons whenever you shop online.

  • Cash in on your old clutter. Got an attic or closet full of old toys and other pieces of your childhood you've been clinging to for too long? Maybe it's time to cash in that stuff. For your old electronics, books and movies, use a buyback service that will take those items off your hands, and give you cash for them.

Fine art as an investment

Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.

That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.

Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.

And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.

On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.

Earlier this year, Bank of America investment chief Michael Harnett singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.

Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich. But with a new investing platform, you can invest in iconic artworks just like Jeff Bezos and Bill Gates do.

About the Author

Sigrid Forberg

Sigrid Forberg

Reporter

Sigrid is a reporter with MoneyWise. Before joining the team, she worked for a B2B publication in the hardware and home improvement industry and ran an internal employee magazine for the federal government. As a graduate of the Carleton University Journalism program, she takes pride in telling informative, engaging and compelling stories.

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