Personal FinancePaul Morigi / Getty ImagesJohn Seetoo24/7 Wall Street Key PointsWarren Buffett’s massive accumulation of US T-Bills during the high inflation of recent years took advantage of the inverted yield curve and continued to earn interest.
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Warren Buffett is probably one of the most famous investors on earth. Unlike entrepreneurs like Tesla’s Elon Musk or Nvidia’s Jensen Huang, Buffett’s wealth has been built by savvy investing and acquisitions folded into Berkshire Hathaway, rather than creation of a product or service. Given Buffett’s stature, it is not a surprise that many investors emulate many of Buffett’s strategies and security choices for their own portfolios. During the past several years, Bidenomics has spurred on ultra-high inflation, which has diminished the buying power of the US dollar. As a result, the yield curve for US Treasuries became inverted, meaning short term maturity rates generated a higher yield than longer term ones. This often signals fears of a pending recession, a very likely scenario, given the skyrocketing prices of inflation-fueled goods and services, the $36 trillion national debt, and downwardly revised Bureau of Labor statistics showing that the close to 1 million jobs creation claim by the Biden/Harris administration was a complete falsehood. In response to the economic warning signs from mid-2024, Warren Buffett curiously decided to heavily go long on US T-Bills. Buffett’s T-Bill StrategySusan B Sheldon / Shutterstock.comUS T-Bills are short term US government debt instruments with maturities up to 52 weeks.2024 saw some Berkshire Hathaway portfolio moves from Warren Buffett that deviated widely from his long-established “buy it and keep it” methodology. Perhaps triggered by the passing of his long-tenured partner, Charlie Munger, Buffett made headlines with the following moves:Sold large positions in Apple (net sale of 600 million shares since 2022) and Bank of America (over 200 million shares sold).
Donated billions to various charities in honor of Munger.
Loaded up on US T-Bills to total $288 billion. (The inverted yield curve goosed short-term interest rates under 52 weeks by as much as 50 basis points over the 10-year US Treasury Bond.)
Stayed in cash up to $48 billion.
Analysts surmise that Buffett was anticipating the market to drop precipitously and that certain companies that are overvalued wil