Warren Buffett: Be Wary of Investing in Bonds, Currency-Tied Holdings

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One of the most successful investors in the world is avoiding buying bonds and other currency -tied holdings, arguing that low interest rates and inflation have made equities more attractive.

Berkshire Hathaway Inc. ( BRK/A ) chairman Warren Buffett said in his annual letter to shareholders that bonds are "among the most dangerous of assets" as interest rates hover near record lows. Buffett said that savvy investors are instead investing in equities, contending bonds "over the past century … have destroyed the purchasing power of investors in many countries, even as these holders continued to receive timely payments of interest and principal."

Buffett noted that the greenback has fallen roughly 86 percent in value since 1965, "even in the U.S., where the wish for a stable currency is strong." While Buffett conceded high interest rates can "compensate purchasers for the inflation risk they face with currency-based investments ," he said that today's economic landscape is rewarding those who invest in stocks as opposed to other financial instruments.

The Oracle of Omaha transformed Berkshire Hathaway from a textile maker into a conglomerate with stakes in high profile companies such as Coca-Cola and IBM ( IBM ). His comments echoed those of BlackRock Inc. chief executive Laurence D. Fink, who also warned this week against investing in bonds and other currency-tied holdings.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: News Headlines , Bonds , Economy

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Michael Bordieri

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