In addition, in response to the adverse situation of the recession

In addition, in response to the adverse situation of the recession, Buffett is adjusting its investment structure, the focus of investment to fixed-income assets transfer.
In recent months, Buffett has frequently bought corporate bonds with annual yields of 10% to 15%, such as $ 2.2 billion Swiss reinsurance company (10% annual yield); $ 250 million luxury jeweler Tiffany Annual yield of 10%); $ 300 million motorcycle maker Harley-Davidson (annual yield of 15%); $ 150 million Sealed Air Company (annual yield of 12%) and so on.
If you add Goldman Sachs and General Electric, Buffett in six months to invest in fixed income products, the total amount has reached 11.6 billion US dollars, the investment weight is much higher than the equity investment products.
Actively buy high – yield bonds
A 2007 follow-up study shows that if investors simply invest in Cartier love bracelet replica Buffett’s portfolio, they can also earn 25% annual returns over the past 31 years, twice the S & P 500 earnings.
However, there are many recent authorities are challenging Buffett’s investment strategy, questioning its investment strategy is out of date. One of the most famous is Jim Cramer, the host of a popular investment program “crazy” by CNBC. For its investment in Goldman Sachs and General Electric and the purchase of corporate bonds, Kramer that Buffett is not “buy the United States”, but in the “loan the United States”, misleading the public.
Buffett really is “Lian Pao old man, still rice no”? In fact, Buffett’s current position is a “into the attack, retreat to defend” combination.
First of all, by the financial crisis, the company’s earnings damage, short-term stock market will be extremely volatile. High yield of fixed income products at this time is almost a Noah’s Ark. At the same time, corporate bonds have a very limited buy window time, when Lehman Brothers filed for bankruptcy protection, BBB-class bond yields once soared to 10.2%, setting a 17-year high. The same level of bond yields yield only 6.1% a year ago.
The high yield of bonds is caused by the liquidity freeze in the financial crisis. Once the crisis is alleviated and the liquidity is thawed, the bond yields will fall. This is a fleeting investment opportunity. While the equity window of the product more flexible, especially when the financial crisis to the economic crisis, the stock market can be described as “Montreal gold.”
Second, high-yield bonds can bring steady cash flow Cartier love ring replica. According to the proportion of Buffett’s ongoing holdings, fixed-income products each year for Berkshire to bring about 3.5 billion -40 billion low-risk dividends and interest income.
In addition, the biggest risk of fixed-income products is the bankruptcy of bond companies. The annual yield of the 10-year US government bond fell to 2.8%, and in the past 10 years, the average yield of 10-year US government bonds was 4.65%.
Investors in the case of extreme security, on the one hand is the US government bond yields continue to narrow, on the other hand is the corporate bond yields soared. Buffett at this time against the trend, began to buy large high-yield corporate bonds.
Another risk for corporate bonds is inflation and interest rates rising. But after the financial turmoil, the world economy for a long period of time will face deflation and low interest rates (or even zero interest rates).
In fact, Buffett is not taking into account the investment safety issues, Bear Stearns, Lehman Brothers, AIG had previously had to find Buffett, but have been rejected, Buffett refused to business much more than the transaction business. Since last year, Buffett has invested in both Goldman Sachs and General Electric, or corporate bonds of the company did not happen any bankruptcy crisis rumors.
This is not lucky, with Buffett’s rich investment and financial experience, it is much easier to identify a company that may be bankrupt than to find a company that is profitable to grow.
The man who questioned Buffett was obviously imitation Cartier love bracelet thinking. The hands still hold a lot of cash Buffett, the future is more like a “fall into the beauty group of Playboy”, in the stock market can be indulgent, because you can enjoy a greater “discount”.

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