The iSHares 20+ Year Treasury Bond ETF (TLT) pays investors an “income” yield of 4.07%.
Those same shares have lost -3.08% over the last 12 months and -9.5% over the last two years.
This is a great example of “losing money safely”. And that’s not even factoring in the risks that three of Wall Street’s biggest names are warnings about the bond market.
There is nearly $2 trillion dollars under the guidance of Warren Buffett, Jamie Dimon and Ray Dalio. This trio of Wall Street legends have been increasing the volume and frequency of their warnings over the last year.
Yesterday, JPMorgan CEO Jamie Dimon warned that the bond market is heading into danger. Debt and deficits are ballooning. Long-term Treasuries are considered volatile and vulnerable. Growth and reform may stabilize the system, but not before investors see another drop in the country’s largest liquidity market.
Just hours after Dimon’s remarks, hedge fund legend Ray Dalio echoed the same concern.
“I think we should be afraid of the bond market,” Dalio said. “This is very, very serious.”
And when Dalio says “serious,” investors should listen.
Dalio is the founder of Bridgewater Associates, the world’s largest hedge fund, with a track record of accurately predicting major macro shifts, including the 2008 financial crisis and the European debt debacle.
Dalio’s latest call includes the U.S. having only three years before entering a “critical situation.”
Need more? Over the weekend, reports confirmed that Warren Buffett is now one of the largest holders of short-term U.S. Treasuries, owning nearly 5% of the entire T-bill market through Berkshire Hathaway.
The “Oracle” has moved from the long end of the curve to the short as a means for survival.
Put all that together, and it’s clear: your 60/40 bond portfolio is broken and ready to crash.
I’ve been calling this out for more than six months. Bonds - especially long-duration Treasuries - have been quietly suffering through a bear market. And now the warning lights are blinking red.
The big fear? Liquidity. If the bond market breaks, like it did in 2008–2009, it would freeze the entire financial system. When buyers disappear, prices collapse. Credit dries up. Borrowing halts. And the ripple effects hit everything from mortgage rates to corporate debt markets.
That’s why smart money is running, not walking, to the short end of the curve.
Fixed-income investors are no longer getting paid to take long-duration risk. In fact, they’re getting punished.
As of today:
That’s a razor-thin spread, and far from enough compensation for the wild volatility we’ve seen in long bonds. In 2025, the 20-year Treasury has gone from negative to positive five times this year. That volatility is historically not what “long bond” investors expect.
The historic volatility levels have investors looking for alternatives. Ultra-short bond ETFs are pulling in historic amounts of capital.
The iShares 0–3 Month Treasury Bond ETF (SGOV) and the SPDR Bloomberg 1–3 Month T-Bill ETF (BIL) are among the top 10 ETFs by inflows in 2025.
Together, they’ve hauled in more than $25 billion. Only the S&P 500-tracking VOO ETF has attracted more.
Even Vanguard’s Short-Term Bond ETF (BSV) has surged into the top 20 by flows, with more than $4 billion added this year alone.
This reflects the Alternative Bond Portfolio that investors are adopting for the first time in more than a decade. High-liquidity, short-duration, low-volatility income assets.
This is the only fixed-income strategy that makes sense right now.
Warren Buffett doubling down on short-term T-bills is a huge signal.
According to JPMorgan, Berkshire Hathaway now owns 5% of all outstanding short-term Treasuries. Think about that. The Oracle of Omaha, who traditionally eschews macro bets, is betting big on one thing: safety.
Long bonds are still reeling from the Fed’s aggressive tightening cycle. Rates may have paused, but the bond market hasn’t healed. Tariffs are back in the headlines. Inflation threats linger. And there’s talk of a major tax cut bill on the horizon that could further blow out the deficit.
That combination - rising supply, investor fear, and fiscal uncertainty - makes long bonds a powder keg.
Adding to the situation is investor complacency. Too many investors are still overweight U.S. large-cap equities and underweight fixed income as they adhere to the 60/40 rule. That’s a dangerous mix.
Last February, the 60/40 portfolio showed signs of coming back to life as the 20+year Treasuries were emerging from a bear market. That trend reversed two months later, killing the option for the 60/40 return.
But again, it’s not just about owning bonds. It’s about owning the right bonds.
That means short duration, high-quality, highly liquid, and tactically diversified holdings. That’s the playbook for an Alternative Bond Portfolio.
Global Diversification: The Other Piece of the Puzzle
Just as short-duration bonds have become the go-to safe harbor in fixed income, international equities are now stepping up as credible alternatives to U.S. large caps.
Global equities are now doing real work inside portfolios, reducing volatility, enhancing diversification, and adding return in a fragile bond and stock environment.
This isn’t the time to be passive with your portfolio. When guys like Dimon, Dalio, and Buffett are all waving the same red flag, it’s time to listen.
Long bonds are broken. Duration is dangerous. And the old 60/40 allocation model? It’s on life support.
The answer isn’t to run to cash, it’s to evolve. The Alternative Bond Portfolio is how you stay defensive, generate yield, and avoid the wreckage building in the traditional bond market.
Start with ultra-short ETFs like SGOV and BIL. Layer in strategic short-duration bond funds like BSV. Add global equity exposure in markets that are actually working. And stay nimble.
What’s coming next isn’t just a soft landing or a mild recession, it may be the beginning of a credit realignment. One that only the nimble, diversified, and prepared will weather well.
