Warren Buffet's Berkshire doing good despite the virus crisis

Berkshire Hathaway's annual meeting took place in an unusual manner: a virtual meeting, without the presence of Charlie Munger. However, Warren Buffett's comments will likely affect the performance of the financial markets this week, especially considering that many investors are closely following his movements.

One of the biggest conundrums during the current virus situation is why Berkshire, sitting on a small fortune, didn't use its money. After all, the stock market fell by more than thirty percent from its historical highs, reducing the value of many interesting companies.

But Berkshire chose to sit on the sidelines. Unlike the financial crisis 12 years ago, when Berkshire was actively involved in buying undervalued companies, the current health crisis has led to a different reaction from the world's most admired investor.

To the surprise of many, Berkshire didn't buy but sold. As it turned out, the company has liquidated all of its shares in the airline industry - a decision that will most likely have repercussions on airlines already in trouble.

Berkshire consolidating its cash flow

The reason for the sale of airline stock is that the world has changed because of the corona situation. And, because of that, there are suddenly too many planes and fewer vacationers to serve.

However, investors are likely to look beyond Buffett's words. If Berkshire doesn't find a worthwhile investment after such a sale, it can mean two things.

The first is that the current liquidation of the market is not over, which means that the lows have not yet arrived and the path of least resistance in the stock market indicates a decline. In this case, Mr. Buffett's comments will most likely fuel the fire and push U.S. stock market indices lower.

Another is that Buffett has become pessimistic. After all, this is a crisis like no other, and it may require an even stronger cash position for Berkshire. At the end of the first quarter this year, Berkshire holds a huge $136 billion in cash and cash equivalents and has no desire to deploy it. On the contrary, it has sold its shares in US airlines.

Perhaps the world is changing too fast for a giant like Berkshire to adapt quickly. After all, it's easier to beat the street when you're small, but increasingly difficult as the size of the investment instrument increases.

But one thing hasn't changed for the one investor who has always bet against the apocalypse: Buffett still believes in the U.S. economic miracle, and he's sure that Americans will win, once again. In the meantime, however, Berkshire has sold its shares in U.S. airline companies.

Is this Buffett's way of telling the world that more problems are coming for the stock market?