Warren Buffett hints at bond bubble

October 5, 2010 by · Leave a Comment
Filed under: Opinion 

Warren Buffet could be right but I think he is discounting the risk in the markets over the long-term.  Another explanation is that we have run too far too quick and their is growing fear (healthy) in the markets.  Investors was to be creditors over equity holders because over history that is a more certain method of principle retention.

Warren is absolutely correct on the point that eventually interest rates will rise and that will crush people locked in bonds at this historic rate.  The real question is if before the “reflation” happens, will we see another market crash where people in stocks at these prices and valuations will be crushed in the decline.  I am of the opinion that keeping your capital safe should be the number one priority until we get a clear sign that we are out of the woods.  We have not seen that sign with central banks are starting to do more quantitative easing (money printing) to keep the economy afloat.  Don’t believe?   Just look at the record gold bullion prices.

Fortune – Buffett, speaking Tuesday at Fortune’s Most Powerful Women Summit in Washington, said it’s “quite clear stocks are cheaper than bonds” now. He added that he “can’t imagine” the rationale for adding bonds to your portfolio at current prices.

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Soaring U.S. Budget Deficit Will Mean Billions More in Bond Sales

April 23, 2009 by · Leave a Comment
Filed under: Currency News 

This is going to get out of control over time unless we really start to reduce government spending or we are going to flood the market with dollars and it will make us have to make some very tough choices in the future which could include and official devaluation of our currency.   Currently the jobs market is the biggest thing dragging down the U.S. economy.  Credit availability is still a huge issue but even if that comes back, I am not sure if we would want that to flow back into the areas of the economy where a large part of the jobs have been lost (Finance, Real Estate and home construction).  

News (Bloomberg):

Millions of lost jobs mean billions in lost tax revenue for the U.S. government, and billions in additional Treasury debt to fund a federal budget deficit that may soar to more than four times last year’s record $454.7 billion.

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