A Warren Buffett warning

Warren Buffett's annual letter to shareholders is out. His company, Berkshire Hathaway, had its worst year since the premier stock picker took it over in 1965. Of course, a lot of CEO's would kill to have his results--even in a bad year.

As always, his letter is a remarkable document. I'd recommend reading it several times. I plan on it.

But for right now I want to highlight a segment of the letter that warns of a Treasury market "bubble." The timing is uncertain, but I think he's right. No market rallies forever. Investors don't like zero percent yields. The economy will rebound, eventually.

Here's what Warren Buffett has to say:

The investment world has gone from underpricing risk to overpricing it. This change has not been minor; the pendulum has covered an extraordinary arc. A few years ago, it would have seemed unthinkable that yields like today's could have been obtained on good-grade municipal or corporate bonds even while risk-free governments offered near-zero returns on short-term bonds and no better than a pittance on long-terms.

Approval, though, is not the goal of investing. In fact, approval is often counter-productive because it sedates the brain and makes it less receptive to new facts or a re-examination of conclusions formed earlier. Beware the investment activity that produces applause; the great moves are usually greeted by yawns.