Warren Buffett increases his bet on US Treasury bonds

Most investors know that Apple remains Berkshire’s largest stock holding. However, this million-dollar flow that is being allocated to US debt securities has its reason for being.

Warren Buffett

Warren Buffett knows that only a few are needed few smart investments to produce massive market-beating returns. The investment guru told shareholders that, in the approximately 58 years he has been running Berkshire Hathawaythere are only half a dozen to a dozen decisions that have impacted your success as a company.

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The real secret: ““We only swing at the pitches we like.”he said, with a baseball metaphor that he has used for more than 25 years.

Recently, there haven’t been many releases to catch Buffett’s attention: Berkshire’s stock sales have outpaced its purchases in each of the last six quarters. But there’s one big holding that Buffett hopes to keep adding to in the second quarter, and investors can’t ignore it..

Buffett’s bet on Treasury bonds

Most investors know that Manzana remains Berkshire’s largest stock holding. Despite selling a portion of his stake in the company over the past two quarters for tax reasons, it remains Buffett’s biggest bet on the stock market. The Oracle of Omaha hopes that will remain the case for the foreseeable future.

But far exceeding the value of his stake in Apple andHere is Berkshire’s cash and cash equivalents position. That position reached US$189 billion at the end of the first quarter. And Berkshire invests the vast majority of that cash in short-term US Treasuries.

The Treasury bond In the short term they are Buffett’s favorite place to park cash because they offer security and liquidity. In today’s market, you get those two benefits and a good interest rate on top of that. ANDhe three-month Treasury yield sits around 5.4% as of this writing.

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As such, Buffett is stockpiling cash and investing it in Treasury bonds. ““It’s a reasonable assumption that they will probably be around $200 billion at the end of the quarter.”Buffett said of Berkshire’s Treasury bond holdings.

“We’d love to spend it,” he told shareholders. “But we won’t spend it unless we think we’re doing something that has very little risk and could make us a lot of money.”

Those opportunities are few and far between. As Buffett points out, he’s really only made a handful of big decisions to alter Berkshire’s course during his 58-year tenure. And as Berkshire gets bigger, the opportunities shrink because “big money” now means tens of billions of dollars instead of tens of millions. There are only so many investment opportunities that can move the needle at this point.

 
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