Investor lessons from Buffett's USAir mistake

In the last few newsletters we've lookedat the USAir case study to try to discern general lessons for less experienced investors than Warren Buffett. So what can we take away?

1. If the industry economics are appalling, then walk away. Despite the excellent yield on the preferred stock Buffett came close to losing the entire investment because intensified rivalry caused severe operating loses.
2. Industry economics can change, so you need to keep up to date. In the 1980s/90s the impetus for change was regulatory; in 2020 it was a virus. Other potential causes are social shifts (e.g. greening), technological disruption (e.g. online conferencing), and; economic (e.g. relative costs of manufacturing and shipping for different countries)
3. Mergers often lower shareholder value. Mergers bring many opportunities for things to go wrong, from resentment of staff to over-paying.
4. Growth is not important, value is. Many company directors feel it their duty to grow the “top line” (revenue) and expect that to feed through to the “bottom line”. But much growth destroys value. The key factor is ………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1