'Bonds are not the place to be these days,' warns Warren Buffett

Fixed-income investors worldwide - whether pension funds, insurance companies or retirees - face a bleak future, says Berkshire Hathaway CEO

In his annual letter to investors, Warren Buffett bemoaned fixed income as an investment, saying that "bonds are not the place to be these days." The income from a 10-year U.S. Treasury bond fell 94% from a 15.8% yield in September 1981 to 0.93% at the end of 2020. Benchmark Treasury yields have jumped since but are still low by historic measures.

"Fixed-income investors worldwide - whether pension funds, insurance companies or retirees - face a bleak future," the letter said.

However, Buffett's enthusiasm for the future of America and his company Berkshire Hathaway Inc has not been dimmed by the coronavirus pandemic.

Buffett used his annual letter to investors to assure he and his successors would be careful stewards of their money at Berkshire, where "the passage of time" and "an inner calm" would help serve them well.

Despite the disappearance last year of more than 31,000 jobs from Berkshire's workforce, Buffett retained his trademark optimism, buying back a record $24.7 billion of its stock in 2020 in a sign he considers it undervalued.

He also hailed the economy's capacity to endure "severe interruptions" and enjoy "breathtaking" progress.

"Our unwavering conclusion: Never bet against America," he said.

Warren Buffett’s 15-page annual letter to shareholders on Saturday made mention of the pandemic that ravaged the globe in 2020 exactly once: One of his furniture companies had to close for a time because of the virus, the billionaire noted on page nine.

Buffett likewise steered clear of politics, despite the contested presidential election and riots at the U.S. Capitol, and never touched on race or inequality even after protests and unrest broke out in cities across the nation last year. He also avoided delving into the competitive deal-making pressures faced by his conglomerate, Berkshire Hathaway Inc., a topic routinely dissected in past year’s letters.

Meanwhile, Berkshire Hathaway Inc.’s holding in Apple Inc. has become so valuable that Warren Buffett eyes it on an equal footing to the sprawling railroad business he spent a decade building.

Buffett has amassed $120 billion worth of Apple stock since his conglomerate started purchases in late 2016, while only spending $31.1 billion building that stake. That places it among his top three most valuable assets, alongside his insurers and BNSF, the American railroad purchase he completed in 2010, he said in his annual letter on Saturday.

Buffett had traditionally shied away from technology stocks, saying he didn’t invest in companies he didn’t understand. But Berkshire, with help from investing deputies including Todd Combs and Ted Weschler, has come around in recent years, adding shares in Amazon.com Inc., Snowflake Inc., and more recently, accumulating an $8.6 billion holding in Verizon Communications Inc.

“Berkshire arrived very late to the Apple party and it has still worked out,” Cathy Seifert, an analyst at CFRA Research, said in a phone interview. “I don’t know what it says more about -- Apple’s resiliency or Berkshire’s deal-making -- when an iconic technology name is now considered a valued franchise within Berkshire.”