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Warren Buffett on Saturday gave an upbeat assessment of the United States' ability to withstand crises, even as he acknowledged that the coronavirus pandemic could have a wide range of impacts on the economy and his investments.
Buffett opened the annual meeting of his Berkshire Hathaway Inc in Omaha, Nebraska with 1-3/4 hour of remarks in which he tried to soothe shareholders as the pandemic batters the global economy and hurts even his own conglomerate.
Illustrating his remarks with dozens of plain black-and-white slides, the 89-year-old billionaire called dealing with the pandemic "quite an experiment" that had an "extraordinarily wide" range of possible economic outcomes.
But he said Americans have persevered and prospered through such crises as the Civil War in the 1860s, the influenza pandemic a century ago and the Great Depression, and the "American tailwind" would help them do it again.
"Nothing can stop America when you get right down to it," Buffett said. "I will bet on America the rest of my life."
A record loss
The meeting was held virtually for the first time without shareholders because of the pandemic and was streamed by Yahoo Finance.
It began several hours after Berkshire reported a record $49.75 billion first-quarter net loss, reflecting huge unrealized losses on common stock holdings such as Bank of America Corp and Apple Inc during the market meltdown.
While quarterly operating profit rose 6 percent, several larger businesses including the BNSF railroad posted declines, and Berkshire said some of its more than 90 businesses are facing "severe" negative effects from COVID-19, the illness caused by the novel coronavirus.
Buffett said operating earnings will, through at least this year, be "considerably less" than they would have been had the pandemic not occurred.
Berkshire's cash stake ended the quarter at $137.3 billion, reflecting difficulty in finding good places to invest.
He also said he decided that he "made a mistake" investing in U.S. airlines, and that this accounted for some of the net $6.1 billion of stocks that Berkshire sold in April. The conglomerate has sold its entire stakes in the four largest U.S. airlines
It held sizable positions in the airlines, including an 11 percent stake in Delta Air Lines, 10 percent of American Airlines Co, around 10 percent of Southwest Airlines Co and 9 percent of United Airlines at the end of 2019, according to its annual report and company filings.
Airline stocks have been hard hit by the near collapse U.S. travel demand amid the coronavirus pandemic. U.S. airlines are cutting hundreds of thousands of flights, parking thousands of planes as U.S. travel demand has fallen by about 95 percent, and there is no clear timetable for passengers to return to flights at pre-crisis levels.
Buffett said the airline industry's outlook has changed dramatically in just a few months.
"We made that decision in terms of the airline business. We took money out of the business basically even at a substantial loss," Buffett said. "We will not fund a company that -- where we think that it is going to chew up money in the future."
'Woodstock for Capitalists'
The meeting is devoid of the surrounding three-day weekend of dining, shopping and other celebratory events that annually draw tens of thousands of people to Omaha for what Buffett calls "Woodstock for Capitalists."
Buffett, after the initial presentation, started to answer shareholder questions at the meeting.
He was joined by Vice Chairman Greg Abel, 57, who has day-to-day oversight of Berkshire's non-insurance businesses, and is considered by many analysts and investors a top candidate to eventually succeed Buffett as chief executive officer.
Abel is standing in for longtime Vice Chairman Charlie Munger, 96, who normally joins Buffett to answer shareholder questions.
Buffett said Munger is in "fine shape" and looking forward to attending Berkshire's 2021 annual meeting.
Vice Chairman Ajit Jain, 68, who oversees Berkshire's insurance businesses and is also a possible CEO candidate, did not attend either. Abel lives closer to Omaha than Munger and Jain.
Shareholders elected former American Express Co Chief Executive Kenneth Chenault to Berkshire's board, making him the company's first African American director.