Bonds Are not the Place to be These Days: Warren Buffett

In his annual letter to investors, Warren Buffett bemoaned fixed income as an investment, saying that ‘bonds are not the place to be these days.’ The income from a 10-year U.S. Treasury bond fell 94 per cent from a 15.8 per cent yield in September 1981 to 0.93 per cent at the end of 2020. Benchmark Treasury yields have jumped since but are still low by historic measures.
“Fixed-income investors worldwide whether pension funds, insurance companies, or retirees face a bleak future,” the letter said. However, Buffett’s enthusiasm for the future of America and his company Berkshire Hathaway Inc has not been dimmed by the coronavirus pandemic. Buffett used his annual letter to investors to assure he and his successors would be careful stewards of their money at Berkshire, where ‘the passage of time’ and ‘an inner calm’ would help serve them well.
Despite the disappearance last year of more than 31,000 jobs from Berkshire’s workforce, Buffett retained his trademark optimism, buying back a record $24.7 billion of its stock in 2020 in a sign he considers it undervalued. He also hailed the economy’s capacity to endure ‘severe interruptions’ and enjoy ‘breathtaking’ progress.
“Our unwavering conclusion: Never bet against America,” he said. Warren Buffett’s 15-page annual letter to shareholders on Saturday made mention of the pandemic that ravaged the globe in 2020 exactly once: One of his furniture companies had to close for a time because of the virus, the billionaire noted on page nine.

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