Investing in Fixed-Income Securities 155Buffett is widely regarded as the world’s greatest value investor,
which basically means buying stocks, bonds, and other securities, and
whole companies, for a great deal less than their real worth, and waiting
until the asset value is realized. So whether it is blue-chip stocks or high-
yield corporate debt, Buffett applies his same principles. A value investor
goes where the deals are.
Although Buffett is usually thought of as a long-term investor in
common stocks, he has the capability, stamina, and capital to wade into
beleaguered industries and pick out diamonds in the rough. He chooses
specif ic companies with honest, smart managers and cash-generating
products. He also chooses the instruments that make the most sense at
the time. Usually, he has been right and when he’s not, he admits it. As
it turns out, his decision to move strongly into f ixed-income instru-
ments in 2002 and 2003 was def initely right. In 2002, Berkshire’s gross
realized gain from f ixed-income investments was $1 billion. In 2003,
that number almost tripled, to $2.7 billion.