Jump to Navigation
Home

Main menu

  • Home
  • Latest Stories
  • Markets Map
  • Trends and Sentiments
  • Leading Topics
  • News Search
  • Comments and Analysis

Secondary menu

  • Latest News
  • Top Rated
  • Most Popular
  • Archive
  • About Us
  • At least 10 dead in Nicaragua protests
  • Beyoncé and Lamar show what it means to be '...
  • Is There a Gender Gap in CEO Compensation?
  • You Can Now Officially Earn A 'Fortnite: Battle...
  • Primetime For Jeff Bezos: Amazon Chief's Net Worth...
  • There's One Aspect Of 'God of War' That...
  • REGENXBIO: An Underappreciated Leader In Gene Editing
  • Bond Bear Market Rally Cut Short
  • Stocks To Watch: Earnings Blockbusters And Trump Talks...
  • Drab summer, hot jazz, weak franc

    Buffett Cautions Against Buying Long Term USD Bonds

    Sun, 03/27/2011 - 08:51 EDT - curiouscatblog
    • bonds
    • Comments
    • Economics
    • Financial Literacy
    • inflation
    • investing
    • Personal finance
    • Tips
    • warren buffett

    This is another article supporting my belief that long term bonds are not investments I want to take on now. The risks of inflation and low yields seem like a very bad combination.
    Buffett Says Avoid Long-Term Bonds Tied to Eroding Dollar, quoting Warren Buffett:
    “I would recommend against buying long-term fixed-dollar investments”
    …
    “I would much rather own businesses,” he said. “It’s very easy to take away the value of fixed-dollar investments.”
    By “take away” he mean the government can undertake policies to “inflate” their way out of a budget mess. By undertaking policies that create inflation (drastically increasing the money supply, borrowing huge amounts of money, running huge trade deficits…) the country can devalue the currency, the US dollar in this case, and thus reduce the effective cost of the payments they have to make on long term bonds (because they pay back the loans with devalued, inflated, dollars). I believe he is right and long term USD bonds are a very risky (inflation risk) investing option today. Of course I have felt the same way for the last 5 years. I own very little in the way of bonds – I do own a bit of TIPS (Treasury Inflation-Protected Securities), in my 401(k) – but stopped allocating money to that class in the last year.
    Related: Bill Gross Warns Bond Investors (March 2010) – Bond Yields Stay Very Low, Treasury Yields Drop Even More – Who Will Buy All the USA’s Debt?

    • Original article
    • Login to post comments
     

    Related

    • Bond Yields Stay Very Low, Treasury Yields Drop Even More

      Chart showing corporate and government bond yields from 2005-2010 by Curious Cat Investing Economics Blog, Creative Commons Attribution, data from the Federal Reserve. Bond yields have dropped even lower over the last 6 months, dramatically so for treasury bonds.

    • USA T-Bills Sold by Treasury with 0% Rate for First Time Ever

      European government debt has been sold at negative interest rates recently. The United States Treasury has now come as close to that as possible with 0% 3 month T-bills in the latest auction. The incredible policies that have created such loose credit has the world so flooded with money searching for somewhere to go that 0% is seen as attractive. This excess cash is dangerous. It is a condition that makes bubbles inflate.

    • Is This Trump's Mandate to Yellen: "Print More Money Or You’re Fired"

      Submitted by Michael Pento of the Pento Report Trump’s Mandate to Yellen: Print More Money or You’re Fired! What kind of President will Donald Trump be? Will he restore America to its former position of greatness, or end up being feckless like a long list of his predecessors? That is yet to be determined.

    • Brexit fears drive German bond yields to below zero

      FRANKFURT: Investors on Tuesday started paying for the privilege of owning rock-solid German government bonds as fears of a possible Brexit and economic worries caused a rush to the safety of German debt. While borrowers traditionally pay interest on the money they are loaned, in the face of heightened political and economic uncertainty, those interest rates have come down to record lows recently as investors flock to safe havens to park their cash.

    • US Treasury Yield Fall to New Record Low

      Us treasury yield hit a incredibly low level years ago and they have continued to fall further. Granted this is mainly due to the bailout of the economy necessitated by the politicians favors to the too-big-too-fail financial institutions that have given those politicians so much cash over the years.

    • Curious Cat Investing and Economics Carnival #5

      Welcome to the Curious Cat Investing and Economics Carnival: we highlight recent blog posts we found interesting.

    • Why govt bond mkt may not gain even with rate cuts

      MUMBAI: There is an eerie silence in the government bond market as things have slowed down. And, a gain in prices is not a given even if the central bank lowers rates. The question now is who would absorb the flood of bond supply that is expected to hit the market? Foreign funds have nearly used up the $30-billion investment limit set for them in government bonds. Traditionally, banks, insurers and provident funds have been the buyers, but their appetite, too, is likely to be less this time.

    • Low interest rates are here to stay — and there are huge risks

      There is lots in the media at the moment about how interest rates on government bonds in some developed countries are dipping below zero for the first time. This is indeed an historical moment, but it reflects a 30-year trend of collapsing yields rather than a short-term phenomenon. The chart below shows the interest rates on 10-year government bonds in the US, Germany, Japan, Switzerland and Sweden from Swedish bank SEB:

    • Bill Gross Blasts The Fed's 'Government Financing Scheme' And Warns Of 'Inflationary Dragons'

      Regular readers know that "bond king" Bill Gross, who runs the world's biggest fixed income fund at PIMCO, is not the biggest fan of the Federal Reserve's quantitative easing programs.

    • International Inflation Protected Bonds: Double Hedge in Uncertain Times

      MyPlanIQ submits:Bond markets have been in a slump. Various bond ETFs stabilized a bit in the past quiet week. By examining the following trend score table for bond ETFs that represent various fixed income subclasses, one can gain some insights into the current fixed income world:

    Latest

    Drab summer, hot jazz, weak franc
    Drab summer, hot jazz, weak franc
    Sessions Threatens To Quit If Trump Fires Rosenstein
    Sessions Threatens To Quit If Trump Fires...

    Markets Map

    Markets Map

    Follow Us

    Follow Us on Facebook, Twitter, Google Plus and RSS LinkedIn Facebook Twitter Google Plus RSS
    S&P 500: 2579.37 0.16% FTSE: 7487.96 -0.07% Nikk.: 22420.08 1.82% DAX: 13465.51 1.75% HSI: 28594.06 1.22% FX: EUR/GBP: 1.1401 USD/EUR: 1.1618 JPY/USD: 114.1510 Commodities: Gold: 1276.1000

    Bullfax.com - Market News & Analysis 2008-2011
    Contact Us | About Us | Terms & Conditions

    Follow Us on Facebook, Twitter, Google Plus and RSS LinkedIn Facebook Twitter Google Plus RSS .

    Secondary menu

    • Latest News
    • Top Rated
    • Most Popular
    • Archive
    • About Us