Berkshire Hathaway CEO Warren Buffett: Despite the recent downgrade of the U.S. government’s credit rating by Fitch, Warren Buffett remains calm and confident in his company’s investment strategies. Berkshire Hathaway continues to invest $10 billion in Treasury bills each week, reflecting its unwavering faith in the security and resilience of these assets.
Unwavering Confidence
Buffett made it clear in an interview with CNBC that he believes there is no cause for concern. While acknowledging that Fitch raised valid points, he emphasized that there are certain things that people shouldn’t be worried about, and this downgrade is one of them.
The Stronghold of the Dollar
Addressing concerns surrounding the U.S. dollar, Buffett expressed his conviction that it remains the indisputable reserve currency of the world. According to him, this is widely acknowledged by everyone, reassuring investors about the stability of the currency.
Berkshire’s Ongoing Investments
On the subject of Berkshire Hathaway’s ongoing investment in U.S. Treasuries, Buffett revealed that the company purchased $10 billion in Treasuries last Monday and another $10 billion this Monday. He also mentioned that the decision for the following week depends on whether they will buy $10 billion of 3-month or 6-month bills. This highlights Berkshire’s commitment to rolling over its maturing T-bills by purchasing new ones at the weekly government auctions.
The Preference for T-Bills
Buffett’s fondness for U.S. Treasury bills is evident in Berkshire Hathaway’s extensive holdings. With a portfolio valued at approximately $150 billion in cash, the company held $104 billion of T-bills as of March 31. Buffett’s trust in their superhigh security and liquidity continues to drive the company’s investment decisions.
Investment Strategy
While Berkshire Hathaway prefers T-bills, it adopts a “barbell” approach to its investment portfolio, balancing cash and equities. The company’s equity portfolio stands at approximately $375 billion, with a substantial portion invested in Apple (AAPL). In contrast, Berkshire held only $23 billion in bonds as of March 31, reflecting Buffett’s aversion to long-term Treasury bonds.
Fitch Downgrade and the Concerns Raised
Fitch recently downgraded the U.S. government’s credit rating from triple-A to double-A-plus. The rating agency cited a steady deterioration in governance standards, particularly in fiscal and debt matters, over the past two decades. Fitch expressed concerns about the erosion of confidence in fiscal management, mainly due to repetitive debt-limit political standoffs and last-minute resolutions.
As Berkshire Hathaway stands strong amidst these developments, Warren Buffett’s unwavering confidence in his investment strategy reassures investors worldwide.
