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."
Yeah, short term T-bills are a no-brainer
-- Elon Musk (@elonmusk) August 3, 2023
What they like
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.
US Total Market Capitalization as % of GDP data by YCharts.
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.
