Warren Buffett：Berkshire Hathaway 1986 Letter, Additional Excerpt 2

The second category of investments open to our insurance companies is long-term bonds. These are unlikely to be of interest to us except in very special situations, such as the Washington Public Power Supply System #1, #2 and #3 issues, discussed in our 1984 report. (At yearend, we owned WPPSS issues having an amortized cost of $218 million and a market value of $310 million, paying us $31.7 million in annual tax-exempt income.) Our aversion to long-term bonds relates to our fear that we will see much higher rates of inflation within the next decade. Over time, the behavior of our currency will be determined by the behavior of our legislators. This relationship poses a continuing threat to currency stability - and a corresponding threat to the owners of long-term bonds.

Source： https://www.berkshirehathaway.com/letters/1986.html
Locator：1986 Chairman's Letter, additional excerpt 2 · Verified：2026-10-19 · Verification：Short excerpt

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