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To: Gary Korn who wrote (10893)	5/24/1998 1:41:00 PM
From: Zebra 365	Respond to of 27307

Off-Topic Buffet and Bonds <<I had read that Buffet was buying 5-year notes>> Warren Buffet bought up to 16 billion dollars worth of 30-yr treasury zeros back in early Fall/late Summer 1997. These are the most volatile of all long bonds which must represent the degree of confidence he had that the rates were still going to fall or stay low. He won that bet easily by now. BRK.A has been a net Seller of equities over the past 12 months. Pretty strange behavior from Mr "Buy and Hold Forever." You think the "Old Fool" knows something? Zebra PS If you heard this recently about Buffet buying 5-yr treasuries, I would suspect it's true now. I doubt he wanted to hold those 30-yr to maturity, and they look to have more risk now than then. My equity portfolio has a net value of almost 0 with the long vs. short positions. And my long positions are in stocks that traditionally have ignored major market moves.

To: Gary Korn who wrote (10893)	5/24/1998 2:12:00 PM
From: Bill Harmond	Read Replies (1) \| Respond to of 27307

I think we're in for a period where stock prices and bond yields decline together...something we haven't seen in a very long time. I bought the bonds because I want to capitalize on any decline in long-term rates, maintain stability, have the most secure investment on earth (in case I decide to live with it), and enjoy the liquidity in case I want to move back into stocks in a hurry. Going all the way out the curve is the best way to do that without buying derivatives, though past 10 years there's not too much difference. If I were making a bet solely on declining long-term rates, zeros would be a better bet. I don't have any personal experience with zeros, and so I'm avoiding them for now, though the speculator in me says buy them. If long-term rates decline to 5 1/4% by this time next year, that would be a 18%+ total return on the long bond. Gary, do you know the return on 30-year zeros under the same scenario?