Originally Posted by
channa
Your logic would make sense if F9 were losing money. They're not. They've been profitable for the last several months.
Frontier is not a victim of a bad business model. They're a victim of low cash reserves and their bank changing terms on them.
It's easy to blame companies' business models for failure. In reality, many companies are forced into bankruptcy because of something circumstancial -- typically something their bank did to them that they weren't ready for.
Yeah, well, if you run your business so as to succumb when "low cash reserves" come along and negotiate things so as to be at the mercy of your bank, that IS a bad business model. Sort of a circular argument.
The proper aim is a "margin of safety," pointed out by Graham in what, the 1930s?
Buying a house with insufficient income for no money down with an ARM in a rising market makes you look like a genius.
Until it doesn't.
Warren Buffett: "When the tide goes out, we'll find out who's been swimming naked."