Warren Buffett: things are looking bleak for bond investors

Warren Buffett, America’s best-known investor, has warned shareholders in his investment vehicle Berkshire Hathaway that “bonds are not the place to be these days”.

“Fixed-income investors worldwide – whether pension funds, insurance companies or retirees – face a bleak future,” warns Warren Buffett, America’s best-known investor. In the latest annual letter to shareholders in his investment vehicle Berkshire Hathaway, the 90-year-old notes that “bonds are not the place to be these days”.

Buffett’s words came hot on the heels of a tough week for global bond markets. Across the world, bond yields have risen (and thus prices fallen) as investors start to bet on inflation making a comeback as the pandemic recedes. That could finally mark an end to the multi-decade bond bull market that has driven yields to record low levels (see main story). As Buffett notes: “Can you believe that the income recently available from a ten-year US Treasury bond – the yield was 0.93% at year end – had fallen 94% from the 15.8%... available in September 1981?”

As for his own business, Berkshire’s share price has lagged the wider S&P 500 for two years in a row, at a time when Buffett has struggled to find promising prospects on which to spend the company’s near-$140bn in cash. Indeed, it seems that Buffett saw his own conglomerate as one of the best opportunities out there, buying back almost $25bn-worth of its shares in 2020. He says this will likely continue, reminding his investors that buybacks in 2020 raised their “ownership in all of Berkshire’s businesses by 5.2% without requiring you to so much as touch your wallet”.

Recommended

Changpeng Zhao: Binance founder undaunted by the crypto winter
Bitcoin & crypto

Changpeng Zhao: Binance founder undaunted by the crypto winter

Changpeng Zhao, the founder of controversial cryptocurrency exchange Binance, has been severely battered by carnage in the sector. But the future is b…
3 Jul 2022
Ray Dalio’s shrewd $10bn bet on the collapse of European stocks
European stockmarkets

Ray Dalio’s shrewd $10bn bet on the collapse of European stocks

Ray Dalio’s Bridgewater hedge fund is putting its money on a collapse in European stocks. It’s likely to pay off, says Matthew Lynn.
3 Jul 2022
Just how powerful is artificial intelligence becoming?
Tech stocks

Just how powerful is artificial intelligence becoming?

An uncannily human response from an artificial intelligence program sparked a minor panic last month. But just how powerful are machines getting – and…
2 Jul 2022
Persimmon yields 12.3%, but can you trust the company to deliver?
Share tips

Persimmon yields 12.3%, but can you trust the company to deliver?

With a dividend yield of 12.3%, Persimmon looks like a highly attractive prospect for income investors. But that sort of yield can also indicate compa…
1 Jul 2022

Most Popular

Five dividend stocks to beat inflation
Share tips

Five dividend stocks to beat inflation

During periods of high inflation, dividend stocks tend to do better than the wider market. Here, Rupert Hargreaves pick five dividend stocks for incom…
30 Jun 2022
Don’t try to time the bottom – start buying good companies now
Investment strategy

Don’t try to time the bottom – start buying good companies now

Markets are having a rough time, so you may be tempted to wait to try to call the bottom and pick up some bargains. But that would be a mistake, says …
1 Jul 2022
UK house prices are definitely cooling off – but are they heading for a fall?
House prices

UK house prices are definitely cooling off – but are they heading for a fall?

UK house prices hit a fresh high in June, but as interest rates start to rise, the market is cooling John Stepek assesses just how much of an effect h…
30 Jun 2022