Munger has passed away. As a top world-class investor, his ideas have influenced generations. But he and Buffett missed out on Google and cryptocurrency. So, is his judgment right or wrong?
Munger was just one month away from his 100th birthday. As the vice chairman of Berkshire Hathaway, Munger had made many critical remarks about cryptocurrencies and Bitcoin during his lifetime.
His passing is a great loss, and his investment wisdom and outlook on life will continue to influence and inspire future investors.
However, he has been critical of cryptocurrencies, especially Bitcoin.
Munger has publicly criticized Bitcoin many times, calling it "worthless" and "a bubble in human history" and linking it to illegal activities. He believes that Bitcoin has no intrinsic value and its price volatility is too large to be suitable as an investment tool.
Charlie Munger is a name that enjoys a high status in the investment world. He is not only the vice chairman of Berkshire Hathaway, but also a long-time business partner and friend of Warren Buffett. He has won global respect for his thoughtful investment philosophy, sharp insights and unparalleled wisdom.
But should we blindly believe his words? Munger and Buffett missed Google. There is nothing wrong with value investing, but it is not suitable for everyone and every era.
Charlie Munger and Warren Buffett's investment philosophy is mainly based on value investing. They look for companies with stable cash flow, good management teams, and market valuations below their intrinsic value. Their investment strategy emphasizes long-term holding and understanding the businesses they invest in.
Google, as a technology company, its business model and revenue sources (mainly from online advertising) may have been relatively unfamiliar and difficult for them to understand at the time. In addition, Google's valuation may have exceeded what they thought was reasonable.
Buffett also admitted in a later interview that they missed investment opportunities such as Google and Amazon because they did not fully understand the business models and potential of these companies. He said that they should have invested in these companies in their early days of listing, but they missed these opportunities due to their misunderstanding of these companies.
So I broke down a few logics, why do Buffett and Munger criticize Bitcoin?
To sum up the above, their value investment requires low valuation, picking up cigarette butts in a bear market, and the company must have strong value.
Their investment strategy is suitable for large funds and strong resources. At the same time, cryptocurrencies, such as Bitcoin, are inconsistent with their investment philosophy in several key aspects:
1. Intrinsic value: Both Munger and Buffett emphasize investing in assets with intrinsic value. However, the value of cryptocurrencies comes mainly from market demand and supply, rather than cash flow or other traditional value measures. This makes the value of cryptocurrencies more difficult to assess.
Volatility: The price volatility of cryptocurrencies is very high, which is inconsistent with Munger and Buffett’s investment strategy of looking for stable returns.
3. Understand the business: Both Munger and Buffett emphasize the need for investors to understand the business they are investing in. However, the complexity of cryptocurrencies and blockchain technology may make it difficult for them to fully understand.
Regulatory Risks: Cryptocurrencies face many unknown regulatory risks that could affect their value.
Therefore, although cryptocurrency has brought huge returns to many investors, it does not fit in with the investment philosophy and strategy of Munger and Buffett. This may be the reason why they chose to miss out on cryptocurrency.
So does it really mean that Buffett and Munger don’t hold cryptocurrencies?
Berkshire Hathaway has not publicly announced any involvement in any business directly related to cryptocurrencies. The company's CEO Warren Buffett and Vice Chairman Charlie Munger have both publicly expressed their criticism of cryptocurrencies.
However, this does not mean that Berkshire Hathaway does not have companies related to cryptocurrency or blockchain technology in its portfolio. For example, Berkshire Hathaway holds a stake in Bank of America, which has applied for several patents related to blockchain technology.
In addition, Berkshire Hathaway's insurance business may also be affected by the cryptocurrency market. For example, as cryptocurrency becomes more popular, more cryptocurrency-related insurance products and services may emerge.
In general, while Berkshire Hathaway is not directly involved in the cryptocurrency business, the companies in its portfolio may intersect with cryptocurrencies and blockchain technology.
It may be difficult to understand, but to put it simply, they may be shareholders of one of our current blockchain projects.
Cryptocurrencies can provide greater transaction transparency, reduce transaction costs, provide financial services to those who do not have access to traditional banking services, and serve as a tool to combat inflation.
In addition, many believe that blockchain technology, the underlying technology of cryptocurrency, has broad application potential and may have a profound impact on many industries.
Overall, Munger's view is not without merit, but it reflects only one view of cryptocurrency. Cryptocurrency is a complex and evolving field, and its ultimate impact may take more time and practice to reveal.
