Herding cats is probably a much easier task than herding ultra-wealthy humans. Billionaires often have strong opinions reinforced by strong personalities. And they frequently disagree with each other.
However, that’s not always the case. Here’s at least one investment that billionaires Warren Buffett, Elon Musk, and Bill Ackman agree on.
Image source: Getty Images.
Billionaires’ favorite rich uncle
Musk ranks as the wealthiest person in the world, with an estimated net worth of around $225 billion, according to Forbes. Buffett is No. 5, with a net worth of close to $120 billion. Ackman is the “poorest” of the three, with Forbes pegging his net worth at $3.6 billion.
These three billionaires have quite different mindsets. The 92-year-old Buffett focuses on finding attractively priced businesses to invest in with a long-term perspective. Ackman is known as an activist investor who likes to shake things up. Musk is an eccentric innovator who’s frequently controversial.
So what investment do they all agree on? Short-term Treasury bonds issued by the U.S. government.
Buffett told CNBC earlier this year that his company Berkshire Hathaway buys short-term Treasurys “every Monday.” As of June 30, 2023, Berkshire owned nearly $122 billion in short-term Treasury bills.
Ackman posted on X (the social platform formerly known as Twitter) on Aug. 2, 2023 that his hedge fund was shorting 30-year U.S. Treasury bonds. He called it a hedge against the impact of higher long-term interest rates on stocks.
But when another X user contrasted his view with Buffett’s the following day, Ackman replied that he and Buffett were actually on the same page. He noted that his hedge fund is also investing in short-term Treasurys. Musk then chimed in on the conversation, stating that “short term T-bills are a no-brainer.”
It’s not hard to figure out why these three billionaires like U.S. Treasurys so much. There’s no better place to park cash over the short run.
The greatest advantage to short-term Treasurys is their safety. Sure, Fitch recently downgraded the credit rating of the U.S. government. However, Buffett stated in a CNBC interview afterward that the downgrade was nothing to worry about.
He was right. Fitch’s move did little to nothing to make U.S. Treasury bonds less attractive to investors around the world.
Buffett, Musk, and Ackman don’t just like the safety of Treasurys, though; they also almost certainly like the attractive yields available right now. Currently, every U.S. Treasury bond with a maturity of one year or less has a yield of at least 5.35%.
A good asset for investors who aren’t filthy rich, too
Are short-term Treasurys a good asset to own for investors who aren’t filthy rich? I think so.
The valuations of many stocks are at nosebleed levels. That’s evidenced by the metric that Buffett once said was “probably the best single measure of where valuations stand at any given moment.” This gauge, which divides the stock market’s total market cap by the nation’s gross domestic product (GDP), isn’t too far below its highest level ever.
There are some stocks that aren’t absurdly expensive, of course. But for many investors, U.S. Treasurys will be an attractive place to keep their cash until the overall market pulls back. Just ask Buffett, Musk, or Ackman.
Keith Speights has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
