Warren Buffet and Charlie Munger don’t understand Bitcoin
The two billionaires suffer from the same fiat illusion that prevents them from accepting and understanding a Bitcoin standard.
Why are Munger and Buffet critical of Bitcoin?
A breakdown of the top 12 holdings in Berkshire Hathaway’s portfolio and their strong correlation with the existing fiat financial services system.
Have you ever noticed that people who criticize bitcoin have one of two key characteristics? 1) They don’t understand at all what bitcoin is or why it is valuable, and / or 2) Bitcoin’s success threatens their wealth in the fiat system. Without fail, you can place 98% of Bitcoin reviews into these two categories. It is really quite astonishing!
Warren Buffet and Charlie Munger publicly criticized bitcoin at the recent Berkshire Hathaway Annual Shareholders Meeting. Buffett is the fifth richest person in the world (in USD) with a net value of approximately USD 105 billion. Charlie Munger is also a billionaire fiduciary with a net worth of over $ 2 billion in US dollars. Buffet is the President and CEO of Berkshire Hathaway, and Munger is the Vice President. Buffett and Munger can easily be classified as two of the most successful investors of the past 50 years. When they speak, people listen and for good reason! They are obviously good investors; being among the richest people on the planet tends to give you credibility in this way. That said, Buffett and Munger are completely wrong about bitcoin.
Munger’s thoughts on Bitcoin
At Berkshire Hathaway’s annual shareholders meeting this weekend, Munger criticized bitcoin, saying, “ Of course I hate the success of Bitcoin … and I also don’t like just handing out a few billion and billions of dollars more to someone who invented a new financial product out of thin air. air. ”For me, that quote is very revealing.
1) This illustrates both a lack of understanding of what bitcoin is and
2) reluctance or anger to have to adopt a new financial model.
“Of course, I hate the success of BitcoinIs a particularly strange choice of words. Why the hatred? What has Bitcoin done to you before? My interpretation: Munger has become a billionaire in US dollars and does not want to suddenly have to change the unit of account. Simply put, Munger is reluctant to embrace the Bitcoin standard as he would go from being one of the richest in the world (in USD) to owning no bitcoin.
I compare Munger’s comments to someone who has played a sport their whole life. Munger and Buffet have been two of the best at their sport for decades. Suddenly 13 years ago the rules of the sport changed (Bitcoin), but no one told Munger or explained why. Today Munger is looking around and there are now a lot of new people playing the same sport as him. But only play better because the new rules say so.
For Munger, acknowledging the success of Bitcoin would indirectly devalue the USD. He sees bitcoin as a threat to the wealth he and Buffet have created in fiat terms. When people feel threatened by bitcoin or don’t understand bitcoin (or both), they tend to lash out negatively and publicly. It is human nature; we laugh at what we don’t understand and we fight when we feel threatened.
Berkshire Fiat Financial Services Holdings
Why does Munger feel threatened by Bitcoin? Because five of Berkshire Hathaway’s top 12 investments (based on portfolio allocation percentage) are banks or are directly linked to fiat funding (based on Berkshire’s latest 13F deposits). Based on the portfolio allocation percentage, these companies are:
Almost a quarter of Berkshire’s top 12 holdings (not to mention their entire portfolio allocation) are invested in a bank, credit card company or financial services firm that provides investors with ratings of. credit, 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%
- American Bancorp (USB), 2.26%
- Bank of New York Mellon Corp (BK), 1.14%
In terms of fiat dollars, this represents US $ 65.28 billion invested in fiat financial services which continue to excel.
Put your mouth where your money is
Based on this portfolio allocation, does this sound like a business that risks gaining or losing wealth through the adoption of a new financial system? Based on Berkshire Hathaway’s investments, does bitcoin as an accepted unit of wealth help? Of course not. Berkshire risks losing wealth with the success of Bitcoin. Based on the amount of capital Buffet, Munger, and Berkshire have invested in the fiat money system, do their negative bitcoin comments surprise me? Not at all, frankly, if they had come out in favor of bitcoin, with so much exposure to fiat financial services, I would have been shocked. I guess this is also the case with their shareholders. Back in February, if I had bet $ 65.28 billion on the Tampa Bay Buccaneers to win the Super Bowl, do you think I would encourage the Kansas City Chiefs to get a first try? Heck no.
“Don’t tell me where your priorities are. Show me where you spend your money and I’ll tell you what it is. “- James W. Fick
The next time you read a negative Bitcoin review, ask yourself: what do they have to lose with Bitcoin’s success? The answer is very revealing.
“’I’m going to miss a lot of things that I don’t think I understand well enough, and there’s no penalty to invest if you don’t hit a ball that’s in the strike zone, as long as you’re swinging on Something. at some point … we will try to stay in our circle of skills, and Charlie and I are generally in agreement on the end of this circle … we will try to stay in our circle of skills … we will miss many things.” – Warren Buffett
Just like investing, staying in our skill set should also apply to reviews. Knowledge is power.
This is a guest post from Drew MacMartin. The opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.