Airline stocks had a rough week.
Some members of the Girl$ on The Money Instagram family that recently invested in airlines reached out to me with this question:
“I invested in airline stocks recently. Unfortunately, I witnessed the price of all these stocks decline notably this past week. What happened? Did I make a mistake by investing in airlines?”
One of the main reasons why the price of many airline stocks “tumbled” early this week is because of comments made by the legendary Warren Buffett. Buffett is known as one of the world’s best investors.
During his annual meeting, streamed via Yahoo! Finance on Saturday, May 2nd, Buffett made a surprising announcement. He mentioned that his company, Berkshire Hathway, sold off every single share of stocks they had in United, Delta, SouthWest, and American Airlines.
The decision was reached after analyzing what the future might look like for these businesses. Buffett stated, “the world has changed,” and the uncertainty is too substantial.
Ok. With that said, here’s the first thing I have to say: Airlines are not going to disappear from the face of the planet.
We’ll all need to travel somewhere at some point whenever this chaos ends. And for that, we’ll need airlines!
The issue with this industry right now is that there are MANY unknowns.
Would some airline companies start merging with each other to survive?
Which ones have the financial strength to overcome this on their own? Which ones will need some serious help from the federal government?
Which ones will start thriving again at some unknown point in the future? Would some just go out business?
Anything is possible.
However, the stock market does not like the uncertainty of any kind, and that’s one of the main reasons why those stocks tumbled the way they did.
I personally don’t own any airline stocks and never have. I’ve had my reasons.
However, I feel this is an industry that can’t just disappear.
And here’s some investing wisdom to keep in mind:
With investing, either you make money, or you learn AMAZING lessons. No stock portfolio will ever be perfect. The important thing with investing is that our winners outperform our “laggers.”
With investing, either you make money, or you learn AMAZING lessons. No stock portfolio will ever be perfect. The important thing with investing is that our winners outperform our “laggers.”
And so, if your airline stocks are declining, there’s no point in feeling guilty. Take it as a significant learning experience. Reflect on the lessons you’ve picked up from this.
Also – reflect on this question: What was your original thesis (reason) for making those investments? Have those reasons changed?
These are questions you should ask yourself for any investment decision you make that doesn’t turn out as expected.
And finally – Are you willing to wait for this industry to fully recover? Do you have the patience? Only you can answer that question for yourself.
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Girl$ on The Money 
Love this! You’re echoing some of the things that my friends in PE were talking about over (virtual) drinks the other day. I will admit that I bulked up my airline investment with the reasoning that people will start flying again. It’s been a rough week, but I never invest for the short term anyway!
So glad this resonated with you!! I definitely believe that airlines will need to come back at some point. Probably stronger than ever (at least those that survive!). However, a lot of time and patience will be KEY. Love that you’re a long term investor.