May 2020 - Leading Edge Financial

Berkshire Hathaway recently sold its entire stake in Delta, Southwest, American, and United Airlines and stock prices fell after the announcement. What is interesting is all but one out of the four of the airline’s stock prices have gone higher since the low on May 4th when Warren Buffett’s sale was made public.

Stock pricing adjusts daily to numerous events. The decision of one investor, albeit a highly successful and world-renowned investor, should not be your only guiding principle of how to handle your investments. Mr. Buffett has had biases against investing in airlines. Here is one of his famous quotes from the 2007 Berkshire Hathaway Annual Letter:

“The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.”

— Warren Buffett, in the 2007 Berkshire Hathaway shareholder letter

Even Warren Buffet isn’t exempt from making the occasional mistake. Time will tell if his decision to sell was the right one or not. Individual stocks and market prices are set by the collective knowledge of all investors. In this video, Kevin discusses how to take advantage of this collective knowledge rather than follow the few outliers who are trying to outsmart the system.

May 26, 2020

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 05/21/2020 and are subject to change at any time due to the changes in market or economic conditions.

It’s tempting to abandon your financial plan when the world is experiencing unprecedented circumstances. Although the pandemic is new and scary, don’t let the headlines play on your fears and knock you off your path.

History shows that recessions and recoveries are filled with short term spikes and falls. These short term events often serve as a distraction to our long term goals. Having a financial plan and sticking with it through the ups and downs has proven time and again to give you the best chance of success.

In truth, the greater potential danger to our financial plan is not the pandemic and market volatility – it’s inflation (the loss of purchasing power in the future). If you react to the headlines and lock in your losses by withdrawing from the market you are also pulling your money from the opportunity to keep up with inflation and therefore, running out of money in retirement.

Stand firm and trust your plan. Feeling unsure? Give us a call, 865-240-2292.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 05/06/20 and are subject to change at any time due to the changes in market or economic conditions.

May 26, 2020