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Stocks Cheaper Than Bonds- So Says Buffett


According to this Businessweek article, “Berkshire Sells $500 Million of Notes as Borrowing Costs Fall,” Warren Buffett is saying that ‘Its quite clear that stocks are cheaper than bonds.’

So like the true blue capitalist that he is, Warren Buffett is…. What else, issuing notes. And taking advantage of the low borrowing costs in this environment.

While not many people are touching housing with even a ten foot pole. Warren Buffett is using the money raised from selling notes to finance mortgages that people take up to buy homes.

He is a true contrarian. And so very shrewd. One thing that struck me was that all those firms which were in trouble during the last crisis was all hoping to get Buffett to invest in their firm and lend his name to bolster market confidence in their own firms.

So what did he do when the CEO of Lehman asked him to invest in his firm? He took out the Lehman Brothers annual report and wrote the page number on the cover page when he found something he thought disturbing or questionable in the report. In the end the cover was filled with his scribbles of the different page numbers. And one of his own warning signals is never to invest in a firm where there was so many things he found troubling.

He didn’t invest in Lehman and we all know what happen to that particular company.



1.  Berkshire Sells $500 Million of Notes as Borrowing Costs Fall from Businessweek

2. In Year of Living Dangerously, Buffett Looked ‘Into the Abyss’ from Wall Street Journal

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