Charlie Munger, a famous investor and vice president of Berkshire Hathaway, followed in the footsteps of Warren Buffett by harshly criticizing Bitcoin at the annual meeting of the Daily Journal Corporation on Wednesday, February 24. In one of his statements, he quoted the writer English Samuel Johnson when asked what was worse: Bitcoin or Tesla:
"Sir, there is no way to define the precedence point between a louse and a flea."
If anyone believed in the slim possibility that Buffett's holding, Berkshire Hathaway, would replicate Tesla's bold investment in Bitcoin, the billionaire also confirmed that it would not.
"We will not follow Tesla on Bitcoin."
Munger also suggested believing that Bitcoin would tend to fail, as its price can vary widely in short periods, which would prevent the cryptocurrency from becoming a viable medium of exchange:
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"I don't think Bitcoin will end up as a medium of exchange, it is very volatile."
Buffett is known as one of the best investors in the world while also being a severe critic of Bitcoin. In May 2018, the “Oracle of Omaha” called BTC “rat poison squared”.
Can Bitcoin be nothing more than a louse, poison or even a tulip?
Since the crypto started to gain monetary value and to be traded in exchanges it is compared to the bubble of the internet or of the tulips. Much because it is difficult for investors to price an asset so new that many still do not understand the advantages of its characteristics.
“Investing in cryptocurrencies today is a bit like living in the early days of the 1850 gold rush, which involved more speculation than investment. In the past 12 years, they have gone from literally nothing to $ 560 billion in market capitalization. Manias usually don't last 12 years. ”Concludes the report signed by Wells Fargo’s head of real assets strategy John LaForge.
Furthermore, Buffett and Munger's enhanced value investing method focuses on analyzing cash flow assets. There is a reason behind your investments in gold mining companies, rather than simply buying gold directly and saving it. And it's okay that they don't like Bitcoin, but according to Bill Miller, the legendary investor known for overcoming the S&P 500 from 1991 to 2005, having a little bit of money in bitcoin is more of a risk management strategy than anything else. For him, bitcoin is still at the beginning of an adoption cycle and becomes less risky the bigger it gets, in a letter to investors at Miller Value Partners, Bill addressed Warren Buffett's criticism of the cryptocurrency. “He can be right, bitcoin is rat poison, and the rat is money (fiduciary)”.