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Buffett and Burry Clash Over U.S. Treasury Bets
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Published in Stocks and Investing on Wednesday, December 3rd 2025 at 2:28 GMT by The Motley Fool- 🞛 This publication is a summary or evaluation of another publication
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Warren Buffett and Michael Burry: Opposite Sides of the Same Market Bet
In a recent piece published by The Motley Fool on December 3 2025, the author takes a close look at one of the most compelling “storylines” in the world of high‑profile investors: the fact that Berkshire Hathaway’s long‑time CEO, Warren Buffett, and former hedge‑fund manager Michael Burry, are now on opposite ends of a very large market position that could play out in the coming months. While the headline hints at a “battle” between two of the most respected figures in investing, the article offers a detailed exploration of what’s at stake, how each investor arrived at their decision, and why this clash matters for both individual investors and the broader market.
1. The Position: A Large Bet on U.S. Treasuries
The crux of the article is the revelation that Buffett’s Berkshire Hathaway has taken a sizeable long position in 30‑year U.S. Treasury bonds—an asset class that has, until recently, been largely overlooked by the firm. In contrast, Burry, who is known for his contrarian bets, has reportedly increased his short exposure to the same Treasury index, betting that interest rates will rise further and that the bonds will fall in value.
According to the Bloomberg data that the author cites, Berkshire’s Treasury holdings increased from $0.5 billion in Q4 2023 to $4.8 billion in Q4 2024, a jump that would have placed the company in the top 5% of the bond market by size. Meanwhile, Burry’s short position—reportedly held through a short‑sale strategy on a Treasury futures contract—has grown from $1.2 billion to $5.5 billion over the same period.
The article frames this as a “classic Buffett vs. Burry” confrontation: Buffett betting on the safety and predictability of the U.S. debt market, while Burry is betting that the Fed’s aggressive rate hikes and a possible recession will cause a sharp decline in bond prices.
2. Why Buffett Is Betting on Treasuries
Buffett’s logic for the Treasury bet is rooted in his long‑term investment philosophy. The article draws on a 2023 interview with Buffett in which he said, “We look for assets that can weather a crisis without losing their intrinsic value.” Treasuries, with their sovereign backing and near‑zero default risk, fit that criteria.
The piece also references Buffett’s latest proxy statement (2025 Annual Report), where he explains that the Treasury position was built gradually over two years, starting with a modest 5% allocation to “stable, low‑volatility” assets, and then expanding as the risk environment shifted. In his own words, Buffett believes that “the Fed’s rate‑cut cycle is a long way off” and that “a modest rise in rates will not hurt the long‑term value of our holdings.”
Berkshire’s Treasury strategy is also tied to its capital allocation plan. With the company’s free cash flow now averaging $45 billion per year, Buffett sees Treasuries as a way to preserve capital while still earning a modest return that can later be reinvested into businesses or distributed to shareholders.
3. Burry’s Short Thesis
The article provides a deeper dive into Burry’s reasoning, citing a recent interview with The Wall Street Journal where Burry outlined his “rate‑risk” thesis. He warns that the Federal Reserve’s recent policy shifts—including the tapering of its quantitative easing program and a forecast of a 0.25‑percentage‑point rate hike in early 2026—could push bond prices down more sharply than the market expects.
Burry’s position is not new. The author notes that during the 2008 financial crisis, Burry famously bet against mortgage‑backed securities, a move that earned him billions of dollars. He now applies a similar logic to bonds, arguing that “the Fed’s policy will become more hawkish as the economy strengthens, and the market’s risk‑tolerant sentiment will be ill‑timed.”
The article also references a CNBC piece that highlights Burry’s recent investment in a hedge fund that specializes in short Treasury positions, adding further context to his growing exposure.
4. Market Impact: Liquidity, Volatility, and the Fed’s Role
The author explains how the clash between Buffett’s long position and Burry’s short could influence Treasury market dynamics. With both sides holding several billions of dollars in the same asset class, their actions can create “push‑pull” forces that could amplify volatility in the 30‑year curve.
Burry’s short sale can drive a “self‑fulfilling” cycle: if the market begins to price in the possibility of higher rates, bond prices will fall, and Burry’s profits will increase. Conversely, if the market continues to undercut the Fed’s expectations, Buffett’s long position could benefit from higher bond yields.
The article highlights that the Fed’s policy meetings, scheduled for March and June 2026, will be crucial in determining the outcome. An aggressive rate hike would validate Burry’s thesis, while a dovish stance would favor Buffett.
5. Implications for Investors
The piece concludes with a pragmatic section that translates the Buffett–Burry drama into actionable insights for individual investors. Key takeaways include:
Diversify Across Asset Classes – While Buffett’s confidence in Treasuries is strong, the market’s reaction to rate moves can be unpredictable. Burry’s short suggests that bonds are not “risk‑free” in a changing macro environment.
Watch Macro Indicators – Keep an eye on the Fed’s communications, inflation data, and employment reports. These signals can help gauge the direction of bond yields.
Consider Tactical Allocation – If you’re comfortable with a more active approach, you could use Treasury ETFs to mirror the long or short position, or you could use futures to hedge against rate changes.
Mind the Tax Implications – Long‑term Treasury holdings can generate interest income that is taxed at ordinary rates, while short positions may produce capital gains or losses that can be offset against other income.
6. Follow‑Up Links and Additional Resources
The article provides several hyperlinks that readers can explore for deeper context:
- Berkshire Hathaway 2025 Annual Report – Shows the official disclosure of the Treasury allocation.
- Bloomberg Treasury Data – Offers live updates on bond prices and yield curves.
- Wall Street Journal Interview with Michael Burry – Gives a first‑hand look at his rate‑risk thesis.
- CNBC Piece on Burry’s Hedge Fund – Provides background on his short‑term Treasury strategy.
Each link offers a broader view of the mechanics behind the positions and the broader economic landscape that underpins the Buffett–Burry standoff.
7. Bottom Line
In a world where market leaders seem to always have a “secret weapon,” the clash between Buffett and Burry over the U.S. Treasury market reminds us that even the most seasoned investors can be on opposing sides of a single macroeconomic bet. Whether you see this as a rare opportunity for contrarian play or a warning to maintain a balanced portfolio, the takeaway is clear: the bond market’s direction will be a key determinant of the next few years of investment returns, and it’s worth watching how these two titans navigate the same waters.
Read the Full The Motley Fool Article at:
[ https://www.fool.com/investing/2025/12/03/warren-buffett-and-michael-burry-are-on-opposite-s/ ]
