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Is Buffett Really Wrong About Airlines?

By Brendan Byrnes and Austin Smith - Apr 6, 2013 at 1:00PM

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Could airline stocks be a good bet after all?

Warren Buffett famously does not invest in airlines. However, the airline index is up 35% over the past quarter. Is Buffett wrong about airlines? In this video, Brendan Byrnes says no. Among the significant structural barriers that prevent airlines from being good long-term investments are fuel, labor, and other operating costs, along with a lack of competitive advantage and the cyclical nature of the business. There may be short-term runs in airline stocks, but for the long haul, these aren't great companies to be had at fair prices. Check out the video for further details.

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Stocks Mentioned

JetBlue Airways Corporation Stock Quote
JetBlue Airways Corporation
JBLU
$10.23 (0.39%) $0.04
Southwest Airlines Co. Stock Quote
Southwest Airlines Co.
LUV
$43.38 (1.71%) $0.73
United Airlines Holdings, Inc. Stock Quote
United Airlines Holdings, Inc.
UAL
$44.76 (2.78%) $1.21
Delta Air Lines, Inc. Stock Quote
Delta Air Lines, Inc.
DAL
$39.52 (2.28%) $0.88

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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