Buffett says bonds are terrible investments
The billionaire says he has owned them in the past but stocks are a much better place for your money.
"I like owning stocks," he said in an interview on CNBC. "I do not like owning bonds. Now, there could be conditions under which we would own bonds. But they're conditions far different than what exist now." Buffett said that he tells friends and family members to have enough cash on hand to make them feel comfortable. Anything beyond that, he says, should go into stocks.
"Stocks are reasonably priced," said Buffett, the CEO of Berkshire Hathaway (BRK.A). "They were very cheap a few years ago, they're reasonably priced now."
People should also have the proper attitude about stocks, Buffett said, and not panic if they take a 20% drop in value in market volatility.
Buffett said that bonds are priced artificially, partly because the Federal Reserve is buying $85 billion in bonds a month.
If you're jumping into bonds now, you could see some losses when interest rates rise -- and they will rise at some point.
"I would have productive assets," Buffett said about his investing strategy. "I would pay for those enormously over fixed-dollar investments." Buffett has owned bonds in the past, but he said he wouldn't do it now.
Buffett was making the media rounds Monday, appearing in interviews on CNBC and the Fox Business Network after spending the weekend with shareholders at Berkshire Hathaway's annual meeting.
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Isn't this the same Warren Buffett who years ago said that "95% of all people in the stock market probably shouldn't be there."? What changed his mind? Surely not the dot.com bubble, the collapse from the mortgage crisis, or the HFT flash crash.
I think Warren might need a buyer for some stocks he would like to sell.
Everyone recognizes that rates are artificially low. But this is not only because of Bernanke's policy of Quantitative Easing. What receives little attention is that large institutional pension managers are forced by their plan directive to purchase Treasuries. This aides and abets Bernanke's program. Any attempt to alter their purchasing requirement would be met by stiff government opposition.
A better choice would be to say the facts. Yes bond prices will fall as rates rise. However, your fund will be buying bonds at higher rates and if you are in short duration 2-4 year funds, the fund will recover in 2-3 years . The best part it won't take a 50% hit like equities in 2009.
Fatty Cakes, err Mr. Fat Cat; A couple of things you actually said make some sense...
Including the forum's morons part...yukety,yuk...
Believe Warren isn't just waking up to this part, he's just saying what he feels..
The others might have been more forward about it recently..
But then others(many) were touting Bonds until recently...So..
So like a couple commentors have mentioned, for different reasons like and have Bonds.
What Buffet did mention was having a "comfortable amount" of cash and put other monies into investments..That can make you a return and you are satisfied with..The choices are yours to make.
We have "no" Bonds, Mutual Funds or ETFs..Those are our choices.
But do have Cash,CDs,Stocks,Real Estate,Leases and Collectibiles...Our choices.
Strange DonQ, that you would mention Equities taking a 50% hit in 2009...??
Guess maybe you weren't around in 2008 when the hit was actually worse..Are we conveniently forgetting or am I missing something here..??
If by chance, you were attempting to make a feeble political remark....So be it..
We were luckier then most taking a 20-22% hit in 2008...And I had made many mistakes..
When 2009 came along, it was somewhat less in the Spring..
And I was too busy re-arranging and re-allocating to notice...
By July 22-24th 2009, we were fully recovered and it's been pretty good most years since.
I guess I could give Obama credit, but that would just be foolish words..I am the one that made it happen......NO ONE ELSE.
The oracle has spoken!
Let's all be slobbering sheep and gather 'round to listen!
Give me a break, people can be such tools!
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Like yesterday, the overnight session was free of any broad developments, which allowed the focus to turn toward the next batch of earnings in the U.S. In general, most of the reports received since yesterday's closing bell have surpassed expectations, but there were a few noteworthy disappointments too.
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The last time bond investors were this bullish, the 10-year yield saw an extraordinary rise.
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