Is Now a Good Time to Buy Bonds? What Buffett's 2023 Shift Reveals

When examining whether now is a good time to buy bonds, few examples carry more weight than Warren Buffett’s recent investment moves. The legendary investor, who has long championed stocks over bonds, fundamentally shifted his approach in 2023, offering investors crucial insights about current market conditions and bond valuation.

From Skeptic to Treasury Buyer: How Buffett’s Bond Strategy Evolved

Buffett built his multi-billion-dollar fortune primarily through equity investments, holding stocks in iconic companies like Coca-Cola, American Express, and GEICO Auto Insurance for decades. His decades-long focus on stocks was so pronounced that in 2010, he publicly stated: “It’s quite clear that stocks are cheaper than bonds. I can’t imagine anybody having bonds in their portfolio when they can own equities, a diversified group of equities.”

This equity-first philosophy shaped Berkshire Hathaway’s investment approach for years. Yet beneath the surface, the investment landscape was shifting. As interest rates climbed in 2023, Buffett’s stance on bonds underwent a marked transformation. Speaking to CNBC in August 2023, he revealed the scope of this strategic pivot: “Berkshire bought $10 billion in U.S. Treasurys last Monday. We bought $10 billion in Treasurys this Monday. And the only question for next Monday is whether we will buy $10 billion in 3-month or 6-month.”

Why Higher Rates Made Now the Right Time for Bond Purchases

The timing of Buffett’s shift was deliberate. Higher interest rates fundamentally changed the equation between stocks and bonds. Unlike the historically low-rate environment of previous years, bond yields became genuinely competitive with equity returns—a rare alignment that captured Buffett’s attention.

During 2023’s third quarter alone, Berkshire Hathaway accumulated $29 billion in U.S. Treasury bills, raising its total bond holdings to over $126 billion. This wasn’t random capital deployment; it reflected a calculated response to market conditions. Short-term Treasury bills were yielding more attractive returns than longer-term bonds, providing Berkshire with both safety and respectable income while the conglomerate evaluated future equity opportunities.

The 90/10 retirement allocation strategy Buffett has long advocated—90% stocks and 10% safer investments like government bonds—suddenly looked less like abstract theory and more like practical wisdom. When bonds finally offered compelling yields, the case for including them in a diversified portfolio strengthened considerably.

What Buffett’s Recent Bond Moves Mean for Your Investment Decisions

Buffett’s behavior speaks louder than his earlier rhetoric. His aggressive 2023 Treasury purchases suggest that yes, there are indeed periods when bonds become attractive investments—especially when interest rates move higher. The key lies in recognizing those windows of opportunity.

For investors contemplating whether now is a good time to buy bonds, Buffett’s strategy offers a template: focus on short-term government securities offering superior yields, and view bond allocation not as a permanent portfolio weight but as a tactical response to market conditions. When bonds finally compete with stocks on a risk-adjusted basis, diversification makes financial sense.

Stocks remain central to long-term wealth building, as Buffett’s legendary track record demonstrates. But his $126 billion Treasury position proves that when current market conditions favor bonds—high yields, near-zero credit risk, and attractive short-term maturities—adding bond exposure becomes a rational, pragmatic move worthy of serious consideration by individual investors.