Remember the LORD for it is he who gives you the ability to produce wealth and so confirms his covenant... Deut. 8:18

Tuesday, August 11, 2009

Warren Buffett Makes Big Bet on Fixed Income

Warren Buffet is buying more corporate and foreign-government bonds and less stock these days, a possible sign that he is concerned about rising U.S. inflation.
Buffet's investment company Berkshire Hathaway held $11.1 billion in foreign government bonds in its insurance units as of June 30, compared with $9.6 billion three months earlier, the company said in a regulatory filing.

Berkshire's investments in companies such as plane-rental business NetJets and financial institution Wells Fargo have turned out to be poor bets while securities issued by Goldman Sachs and General Electric are offsetting slumping equity investments.

“Some of the normal places he’s gotten the cash to invest are just getting killed in the recession,” Gerald Martin, a finance professor at American University’s Kogod School of Business in Washington, told Bloomberg. “So he’s locking in these guaranteed returns, moving from the volatility of stocks to a steady stream of income that, in some cases, is almost at the return you normally get from the stock market.”

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