Warren Buffett is Now Online

Berkshire Hathaway is fully remote

Warren Buffett had a mellow tone this past weekend. He held his first shareholder conference virtually. To set the stage, this shareholder meeting usually has +30,000 attendees and generates +$10m in sales for Omaha in one weekend.

Berkshire has sold out of all airline investments. Buffett strongly believes the entire industry has changed. People will not travel as much and it will take years for the industry to recover. Buffett believes the government is overreacting to save all businesses in the first inning. We don't know the severity of the crisis and how long the recovery process will be. The world has certainly changed for airlines.

Below is a good explanation on why Buffett sold out of his airline investments. In prior years, he had mentioned the challenges with making airline investments. It seems the current crisis has validated those concerns and he will not be investing in the industry anymore.

It is too early to invest. The government has artificially created demand across the markets. Investors believe the government will rescue every fallen angel. The reality is we will have a Lehman-style event, where funds will be exhausted and one major company will not be saved. More problems are likely to arise in the fall season when the lockdown is over.

Even Buffett is not immune to economic distress. See's candies has lost all of its sales like many other retailers. The business will probably pick up in the holiday season but right now it will take a loss.

Fed reserve acted quickly. To everyone's surprise the Federal Reserve did a terrific job forecasting the economic problems from the virus in March. Buffett showed his admiration for Fed chairman Powell for acting swiftly to lower rates. Fortunately banks are in very good shape to provide loans today. The challenge has been to expedite applications and provide more credit to small businesses.

Never beg against America. Buffett is our #1 cheerleader. And he puts his money where his mouth is. America is still the leading country in the world and will remain that way for the foreseeable future. 

P.S. It always surprises that Buffett can drink multiple cans of Cherry Coke for six hours at each conference. This is a feat in itself. 

Smart Devices

Amazon Alexa, Google Home, and Facebook Portal are already in our homes. This will be the year where smart devices become a necessity.

5G technology: Today, most mobile devices run on 4G technology. But 5G technology is the future and coming fast. Verizon, AT&T, T-Mobile have begun material deployment with a focus on fixed wireless broadband in the home. Following this, we expect 5G cellular rollouts for smartphones usage to accelerate in 2020 to accompany the availability of mass market handsets.

Smart TVs and Home Appliances: Kitchenware is the biggest opportunity for smart devices. Amazon has tried with the microwave and Samsung with the fridge. I think home appliances will see a big shift in this decade. Connectivity will be key. Controlling your ovens, microwave, and washing machines from your phone will be life changing events. 

Automatic doors and rings: Commercial offices and grocery stores are looking into more automated technologies. No one wants to touch door handles or other physical surfaces. The Amazon Go stores have already proven their concept and I think we'll see a bigger roll out next year.

What devices do you think will have the greatest impact in the household? Which ones will increase business productivity. 

The Great Realization

Earlier this week, Bill Ackman shared a heartfelt bedtime story video called the Great Realization. It is a great clip on what is happening in the global economy today. 

The video reminds us to enjoy the current moment. The virus will give a lot of people an opportunity to hit the reset the button before life normalizes again.

I also recommend listening to this Farnam Street podcast episode interviewing Bill on his thoughts about investing and the economy.

Love this newsletter and want to give back? Here are some ideas! ??

1?? Share details about a project or problem you’re working on.

2?? Introduce me to someone entrepreneurial in business or investing.

3?? Forward the newsletter to a friend who might enjoy it.