Warren Buffett is considered an outspoken crypto critic. But for a long time the investor was similarly hostile to tech companies – until he changed his focus.
- Bitcoin critic Warren Buffett still sceptical
- Starinvestor was for years also opponent of Tech titles
- Can a changed focus convince Buffett of crypto currencies?
Again and again, star investor Warren Buffett has in the past raged against crypto currencies in general and the Bitcoin in particular. And also his right hand Charlie Munger has not left good hair on Bitcoin & Co. so far. No one can deny the sucess of btc anymore, recently bitmex hit new volume records, see https://lerablog.org/
Sharp criticism from Warren Buffett
As early as 2014, Warren Buffett made it clear what, in his opinion, speaks against the crypto currency Bitcoin when it was going parabolic (learn more: https://neconnected.co.uk/): “Stay away from it. It’s a mirage, basically. The idea that it has a great intrinsic value is, in my opinion, just a joke.” Since then, the star investor has supported his opinion several times, and Bitcoin has always clearly distinguished himself from investments: “If you want to gamble, someone else will come and pay more money tomorrow, it’s a kind of game. It’s not an investment,” he said, stressing the difference between speculative objects like Bitcoin and real investments. He himself would never invest money in cyberdevisen and could “almost say with certainty that crypto currencies will bring about a bad end”.
Buffett’s right hand, Charlie Munger, found much more drastic words, describing Bitcoin as a “poisonous poison” that he abhorred at the very first moment it appeared. “The more popular Bitcoin became, the more I hated him,” the Berkshire Hathaway vice president added.
Memories of tech dislike awaken
Buffett had once expressed similar rejection, albeit in less dramatic words, of titles from the tech industry. Berkshire’s management team avoided tech stocks for a long time because they did not match the investment criteria of the holding company, which invests in undervalued stocks and holds them for the long term. In the past, Buffett has stressed several times that he would only invest in stocks whose business model he understands – not tech stocks.
But those days are over: in the meantime Warren Buffett is not only one of the biggest shareholders of the tech giant Apple, after he let his investment managers convince him of the advantages of the stock in 2016. In May of this year, it became known that the stock market legend had also bought shares in Amazon for the first time – even though Buffett admitted not to have made the purchase himself, but “one of the guys from the office who manages money”. Before that, however, the star investor had repeatedly pointed out that it was a mistake not to include Amazon in the portfolio much earlier.
What convinced Buffett?
The Berkshire leadership’s change of heart with regard to tech stocks was due in particular to a reinterpretation: For Warren Buffett and Charlie Munger, Apple and Amazon are not tech stocks in the true sense of the word, but service companies – and the star investor has them in his portfolio. Apple is currently working on its future after the iPhone and has already reported its first successes with the latest quarterly figures.
And Amazon is active in so many business areas that even Buffett had to admit: “What Bezos has achieved there comes close to a miracle”. One of the company’s biggest growth drivers is AWS Products and Services, which also focuses on services.
Can Buffett’s opinion about Bitcoin change?
Against this background, the question arises as to whether a change in the nature of crypto currencies could also change Buffett’s mind about this type of investment. Because if the digital tokens actually gain a foothold in the general public, they could at least be a means of paying for goods and services – also and especially in the digital world in which Amazon and Apple are active. For Buffett, however, this question does not arise for the time being. “It’s just a method of transmitting money, an effective method that also works anonymously. But so can a cheque. Are cheques worth a lot of money just because they can transfer money,” he criticized the value of Bitcoin.
He does not see a competitive advantage either, the technology can be copied very quickly, according to the star investor. Unlike Apple and Amazon, which are pioneers or dominant market players in some of their business areas, crypto currencies do not have a unique selling point for him.
What makes things even more difficult is the fact that Buffett only invests in things he understands – because of the complicated algorithms, Bitcoin is likely to remain a book with seven seals for many investors.
It is therefore unlikely that Warren Buffett will change his mind about Bitcoin in the near future. This is what Charlie Lee, the founder of the crypto currency Litecoin, believes: “It is not possible to convince him. He is not investing in technology. He is not invested in Bitcoin, nor will he be in the future. And that’s not surprising at all”.