Why do Munger and Buffet criticize Bitcoin?
A breakdown of Berkshire Hathaway’s top 12 portfolio holdings and their high correlation with the existing fiat financial services system.
Have you ever noticed that people who criticize Bitcoin have one of two key traits? 1) They don’t understand at all what Bitcoin is or why it has any value, and / or 2) Bitcoin’s success threatens their prosperity in the fiat system. Without fail, you can divide 98% of Bitcoin criticism into these two categories. It is really amazing!
Warren Buffet and Charlie Munger publicly criticized Bitcoin at Berkshire Hathaway’s recent annual general meeting. Buffett is the fifth richest person in the world (in USD) with a net worth of ~ USD 105 billion. Charlie Munger is also a fiat billionaire with a net worth of over $ 2 billion. Buffet is the chairman and CEO of Berkshire Hathaway, and Munger is the vice chairman. Both Buffett and Munger can easily be ranked as two of the most successful investors in the past 50 years. When they talk, people listen, and for good reason! They’re obviously good investors; That way, being among the richest people on the planet gives you credibility. Even so, Buffett and Munger are absolutely wrong about Bitcoin.
Munger’s thoughts on Bitcoin
At Berkshire Hathaway’s annual shareholders meeting this weekend, Munger criticized Bitcoin by saying, “Of course, I hate the success of Bitcoin … and neither do I like someone who invented a new financial product from scratch, a few extra billions and billions upon billions of dollars to give air. “For me this quote is very telling.
1) It shows both a lack of understanding of what Bitcoin is and
2) reluctance or anger to adopt a new financial model.
“Of course, I hate Bitcoin’s successIs a particularly strange choice of words. Why the hate? What has Bitcoin ever done to you? My interpretation: Munger has become a billionaire in USD and doesn’t want to suddenly have to change his unit of account. Put simply, Munger is reluctant to adopt the Bitcoin standard as he would move from being one of the richest (in USD) in the world to owning zero Bitcoin.
I compare Munger’s comments to someone who has been exercising his entire life. Munger and Buffet have been two of the best at their sport for decades. Suddenly, 13 years ago, the rules of the sport (Bitcoin) changed, but no one told Munger or explained why. Today Munger is looking around and there are now many new people playing the same sport as him. But only play better because the new rules tell you so.
For Munger, recognition of Bitcoin’s success would indirectly devalue the USD. He sees Bitcoin as a threat to the wealth he and Buffet have made in fiat terms. When people either feel threatened by Bitcoin or don’t understand Bitcoin (or both), they tend to hit each other negatively and publicly. It’s human nature. We mock what we don’t understand and we fight when we feel threatened.
Beriathires Fiat Financial Services Holdings
Why does Munger feel threatened by Bitcoin? Because five of Berkshire Hathaway’s top 12 properties (based on percentage of portfolio allocation) are banks or directly related to fiat funding (based on latest Berkshire 13F filings). Based on the percentage of portfolio allocation, these companies are as follows:
Nearly a quarter of the top 12 positions in Berkshire (let alone their entire portfolio allocation) are invested in either a bank, credit card company, or financial services firm, which provides investors with credit ratings, risk analysis, and research on stocks, bonds, and government entities.
- Bank of America Corporation (BAC), 11.35%
- American Express Company (AXP), 6.79%
- Moody’s Corporation (MC), 2.65%
- US Bancorp (USB), 2.26%
- Bank of New York Mellon Corp (BK), 1.14%
In fiat dollars, that’s $ 65.28 billion invested in fiat financial services that continue to perform well.
Put your mouth where your money is
Based on this portfolio allocation, does this seem like a company that may gain or lose wealth from the introduction of a new financial system? Will Bitcoin Help As An Accepted Unit Of Asset Based On Berkshire Hathaway Investments? Of course not. Berkshire will lose wealth with the success of Bitcoin. Am I surprised by your negative comments on Bitcoin given the amount of capital that Buffet, Munger and Berkshire have invested in the fiat currency system? In all honesty, I would have been shocked if they hadn’t spoken out in favor of Bitcoin as they were so badly affected by fiat financial services. My guess is also so would their shareholders. If I had bet $ 65.28 billion on the Tampa Bay Buccaneers to win the Super Bowl last February, would I cheer the Kansas City Chiefs when they hit an initial loss? Crap no.
“Don’t tell me where your priorities are. Show me where you spend your money and I’ll tell you what they are.” – James W. Fick
The next time you read a negative review on Bitcoin, ask yourself: what can you lose with Bitcoin’s success? The answer is very telling.
“I will miss a lot of things that I don’t understand well enough and there is no penalty in investing for not swinging on a ball that is in the striking zone as long as you are swinging on something. to stay within our circle of competence, and Charlie and I generally agree on where that circle ends … We will try to stay within our circle of competence … We will miss a lot of things. “- Warren Buffett
Just like investing, it should also apply to criticism to remain in our area of competence. Knowledge is power.
This is a guest post by Drew MacMartin. The opinions expressed are solely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.