Around the same time as GE, and for almost the same reasons, I jumped on the airline Swissair, via the Sair Group. The Swiss airline was at the time among the best airlines in the world. The stock had been pretty much shaken up since 1998, due to a series of bad investments.
At the beginning of 2001 the stock had already melted away, losing more than half of its value. I told myself that this was the perfect opportunity to acquire this flagship of the Swiss economy at a lower price. I got in around 200 balls per share.
I remember leaving at 6 francs a share... disgusted. Once again, it was obviously much too late.
Why I bought it
As with GE, I was totally obsessed with the history and reputation of Swissair. It was inconceivable to me that this great company could go bankrupt. On the contrary, I even thought that the stock would rise significantly.
My mistakes
- Buying a stock just because it was in the spotlight, without considering its fundamentals
- Not cutting my losses much sooner
- Having bought a title just for its history and reputation
- Falling in love with a title
- Buy a falling knife
What I learned in the moment
Airlines are never safe. They regularly go into crisis due to exogenous factors, such as the price of oil, terrorism or viruses... It is not because a company has a long history and is big that it cannot go bankrupt. I have also started to be wary of stocks that are plummeting.
What I didn't learn at the time
Business fundamentals were still a vague concept to me at that time. Again, even though I later became more cautious about stocks in bear markets, I still didn't understand the importance of cutting losses.
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Aaaah, Swissair! What a symbol! Its fall to bankruptcy allowed many, generally in pain, to consider that such prestigious, historical and legendary companies can also go down, definitively KO. The inconceivable became reality.
In Switzerland, the Swissair affair has had a strong (and lasting?) impact on people's minds in general and on investors in particular.
It should be noted that the great Warren Buffet had invested in recent years in American airlines (Delta, Southwest, AmericanAirlines, UnitedContinental). Certainly, in this sector, these companies are (were?) very well managed and healthy, but the said sector is indeed sensitive and risky by nature.
If WB invested in them, it is certainly because it has detected quality. That being said, as beautiful as they are, these companies are more than any other subject to exogenous factors that they cannot control.
As you say, the example of Swissair has had a lasting impact on investors' minds. I would even say that it has shaped them.
Is the current Swiss airline a descendant of Swissair?
It's clear. Swiss is the company that emerged after Crossair bought the bankrupt Swissair. It was a world upside down. It's as if today the cantonal bank of Valais bought UBS!
You know the little joke…
How to become a millionaire?
Be a billionaire and start an airline.
Ah well here it is…:
The man nicknamed "the Oracle of Omaha" revealed that his holding company Berkshire Hathaway sold its entire stake in the four major US airlines in April, believing that the pandemic had changed the situation and that the investment was "a mistake". "It turns out I was wrong," admitted the businessman, commenting on this acquisition of around ten percent in American Airlines, Delta Air Lines, Southwest Airlines and United Airlines.
Berkshire Hathaway had paid $7 billion to $8 billion, and "we sold for much less than that," said the fourth richest man in the world and considered an outstanding investor. Between the time the holding company bought its stakes over many months and the resale, "the airline industry changed very profoundly" and could therefore no longer meet the profitability criteria set by the company.
Also see:
https://www.lecho.be/les-marches/actu/general/fin-de-carriere-chaotique-pour-warren-buffett/10224700.html
This is the kind of article that reminds me (if need be) why I consider the vast majority of journalists to be incompetent, frauds and sensationalist hunters.
Buffett has been outperforming the market for over 50 years, and yet every year there is a clown who questions his skills and predicts his demise.
Last year he made almost 40 billion on Apple alone, but because he lost a few billion on airlines, he's now a nobody.
That even the greatest investor of all time occasionally makes a mistake is rather reassuring for small-time stock marketers and only makes him more human!
How can a "journalist" who must have bought 2 shares in his life and lost his entire investment be allowed to publish such a load of nonsense? I am speechless.
That's sent bro!
I didn't even stop at the catchy title or the end of the article. On the other hand, between the lines we can find some interesting information, notably the fact that he can't find anything interesting to buy, which in my opinion is not an admission of helplessness or failure as they think but on the contrary a sign of great wisdom when we know the current level of the American market.
Also the fact that he had the other wisdom to take his losses on the airlines. Even a genius like him can be wrong… temporarily. The mistake would have been to persist.