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The Illusion of Success

November 19th

There is no tougher job in corporate America than running an airline: Despite the huge amounts of equity capital that have been injected into it, the industry, in aggregate, has posted a net loss since its birth after Kitty Hawk.

Warren Buffett

Running an airline is arguably the toughest job in corporate America, notorious for its unpredictability and financial volatility despite substantial investments. It is a stark reminder of the perils of high-risk, capital-intensive sectors.

Understanding the broader landscape of an industry is critical before making an investment decision. It's tempting to be drawn to fields with high levels of capital investment, often linked to an illusion of success and profit. However, assessing cumulative profitability and risk factors, beyond the allure of large capital injections, is crucial.

Further, it hints at the dangers of sunk costs. Once money is poured into an industry, it can distort our evaluation and decision-making process. The more we invest, the harder it becomes to acknowledge a wrong decision. This awareness of the sunk cost fallacy is imperative in our investment journey.

While navigating the turbulent skies of investment, looking beyond appearances, examining the larger picture, and not being swayed by sunk costs will guide you to invest wisely within even the most challenging industries. The quiet, consistent effort often brings the most rewarding journey.

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