Berkshire Hathaway CEO Warren Buffett and Vice Chairman Charlie Munger both came out swinging against bitcoin this week.
Buffett called bitcoin “rat poison squared,” while Munger was cruder, comparing the cryptocurrency to “turds” and “selling baby brains.”
The irony here is rich and layered. Munger and Buffett are legendary value investors known for advising people to invest in what they know and avoid what they don't.
Clearly, neither of these gentlemen knows much about crypto (or technology in general). Buffett reportedlyreportedly, so how can he hope to understand digital assets like bitcoin? I would argue that he can't. And he shouldn't attack assets he doesn't understand.
It's worth noting that Berkshire Hathaway essentially missed out on the entire tech boom. The firm missed on Google, Amazon, Microsoft and others. It did buy Apple, but only in 2016, when it was more of a value stock than a growth one.
Meanwhile investors like Peter Thiel, PayPal founder and first investor in Facebook, and Marc Andreessen, legendary venture capitalist and web entrepreneur, are bullish on bitcoin.
So Buffett and Munger's lack of tech savvy provides some insight into why these legends don't invest in crypto. But considering how nasty and personal the attacks were, I suspect there's more at play here.
Talking Their Book
In a CNBC appearance in 2017, Buffett was asked what his favorite bank stock is. His reply was telling: “What's your favorite child?”
Clearly, he loves them all. And Berkshire Hathaway has made a great deal of money investing in the banking, insurance and traditional payment sectors.
Today Berkshire Hathaway remains one of the largest owners of bank stocks in the world.
The firm's top holding is Wells Fargo. It holds approximately $30 billion in Wells Fargo shares. It also owns around $20 billion worth of Bank of America shares. Berkshire arguably saved Goldman Sachs in 2008 with a $5 billion investment that netted a $3.1 billion profit.
