Extra :
1. Today, " Internal Reference: Combined Harvesting Routine for Contract Short Squeezing " was published on "Liu Jiaolian Internal Reference". Welcome to follow the public account "Liu Jiaolian Internal Reference" and read it.
2. Today, I published an article on the public account "Liu Jiaolian Pro" " I am tired of sleep and do not love, destroy 2500 ether ". Welcome to follow the public account "Liu Jiaolian Pro" and read it.
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What assets should be allocated in a bear market? The answer of Buffett, the former richest man in the world and stock market god, is: U.S. debt.
Due to Buffett's extremely prudent investment style, Berkshire Hathaway has a large amount of US dollar cash on its books all year round. With the advent of the bear market, Berkshire has more and more U.S. dollars, so Buffett chose to convert a large amount of U.S. dollar cash into U.S. debt holdings. The total amount has recently been close to a historical high, reaching a huge US$147 billion [1]. Among them, about 120 billion are short-term U.S. debt of 3 to 6 months.
Chart: Berkshire’s U.S. Dollars and U.S. Treasuries
Although Buffett has accumulated 120 billion U.S. dollars in U.S. debt, he is still "fixedly investing" in U.S. debt at a rate of 10 billion per week. In early August, the rating agency Fitch downgraded the credit of U.S. debt [2], but this still did not stop Buffett's enthusiasm to increase his position in U.S. debt. In other words, the stock gods are using practical actions to express their support for the United States.
However, only he and God know whether the stock god's operations are based on his firm confidence in the fate of the United States or on the idea of picking up high interest rates on U.S. debt. After all, Buffett loves short-term U.S. debt, not long-term U.S. debt.
However, in any case, Fed Chairman Powell understands that raising reserves at high interest rates has proven successful time and time again. As long as America's national credibility remains, this quasi-ponzi game can continue to be played. As long as the United States can maintain its image of being the first in military and science and technology, the country's credibility will not be far behind.
Everyone wants to hoard some U.S. debt to take advantage of the high interest rates offered by the Federal Reserve, so the U.S. debt will naturally have no sales. If U.S. debt sales are good, then Treasury Secretary Yellen’s task of selling U.S. debt will be easier to handle. After all, President Biden spent a lot of effort to obtain two years of unlimited debt issuance authority in June[3], but he should not take advantage of this opportunity to quickly issue more debt and get more money into the hands of the government to spend. !
You see, banks, as the Federal Reserve's personal assistants, have been hoarding U.S. debt for two years, waiting to take advantage of the high interest rates. I never thought that I would be caught off guard at the beginning of the year and almost die. The Federal Reserve took matters into its own hands and launched the financial nuclear warhead BTFP, making a silent declaration to the whole society: Everyone, be optimistic, anyone who cooperates with me in hoarding U.S. debt will be given a gold medal to avoid death!
Therefore, Buffett, who felt that U.S. banks might be in trouble at the end of 2022, had been clearing out related bank stocks early on. However, after the Federal Reserve launched a death-free gold medal in March, giving everyone sufficient confidence to continue to accumulate U.S. debt, Buffett quickly turned around and began to let his Berkshire Hathaway also start hoarding U.S. debt!
At the end of March, Berkshire, which only had more than 20 billion U.S. debt, frantically hoarded U.S. debt at a weekly rate, holding all U.S. debt in just four months on April, May, June, and July. The volume has exploded to more than 120 billion!
This keen sense of smell, this accurate judgment, this decisiveness in turning around, this speed of action! How about saying that he deserves to be the stock god and the richest man?
Even if the 120 billion U.S. debt is held at an interest rate of 5.25% after the Federal Reserve’s latest interest rate hike, the annualized income will be 6.3 billion U.S. dollars! Earn billions of dollars while lying down, and it is a risk-free profit! How about making a lot of money not by earning it, but by picking it up?
Tether, the issuing company behind USDT (approximately $72.5 billion in U.S. debt[4]), started taking action earlier than Buffett. Readers who often read Liu Jiaolian’s internal reference know that Tether has been making a lot of money and making a lot of money since the first quarter of this year [5].
It is half a beat later than Buffett and has just started to act now. Representative figures include MakerDAO’s DSR/EDSR deposits[6] and Paypal’s PYUSD[7], which hastily entered the market.
However, Buffett's hoarding amount is larger than all of them, and it is even larger than Tether, which is relatively large among them. Just like the advertising slogan of Apple, a company that Buffett has heavily invested in: Bigger than bigger (bigger is bigger).
References:
- [1] Berkshire Hathaway’s cash pile nears all-time high at $147bn https://www.ft.com/content/a89fa03c-7c41-432d-9b67-fca6119c8018
- [2] Liu Jiaolian’s official account 2023.8.3 article “Fitch takes action! U.S. credit rating downgraded again》
- [3] Liu Jiaolian's public account article "Biden signed" on June 4, 2023
- [4] Liu Jiaolian Internal Reference Official Account 2023.8.4 "Internal Reference: Hong Kong's first card-eating trading platform for retail users is officially launched"
- [5] Liu Jiaolian’s official account 2023.5.20 article “Stablecoins are a good business”
- [6] Liu Jiaolian Internal Reference Public Account 2023.8.8 "Internal Reference: DAI DSR deposit interest rate raised to 8%, exceeding the Federal Reserve interest rate"
- [7] Liu Jiaolian's public account 2023.8.8 article "Paypal, which prompted Satoshi Nakamoto to retire, launched the on-chain stable currency PYUSD"
* * * Original work by Liu Jiaolian * * *
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(Public account: Liu Jiaolian. Knowledge Planet: The public account replies "Planet")
(Disclaimer: None of the content in this article constitutes any investment advice. Cryptocurrency is an extremely high-risk product and may return to zero at any time. Please participate with caution and be responsible for yourself.)