And, I don’t mean any disrespect towards a 98-year-old investor who’s been an enormously successful stock picker and has amassed a fortune in the billions of dollars. It’s just that he and his colleague, Warren Buffett, have made some wild, inflammatory statements about cryptocurrencies that are, frankly, not true.
Tuesday, appearing on CNBC with Rebecca Quick, Munger stated, “I’m proud of the fact that I missed out on crypto. It’s like some venereal disease. It’s beneath contempt.” Gee, don’t hold back, Mr. Munger.
Munger went on to blast Bitcoin even more, if that is possible, saying that he admires the Chinese for banning Bitcoin, and wishing the US had done the same. Admires the Chinese.
On Cryptocurrency Traders:
Some of his other comments this week were about cryptocurrency traders, apparently a class of low-life’s that Munger doesn’t want to associate with. The Berkshire Hathaway Vice-Chairman feels that traders, as opposed to long-term investors, add nothing to civilization. Here is his actual quote: “Crypto traders want to get rich quick without doing anything for civilization.”
From his comments, it could be taken that he feels the same way about stock traders, bond traders, and commodities traders. This is one point where I really disagree with Munger. He is wrong on this.
People have said for decades that short-term traders add nothing to society. That’s short-sighted, and here’s why. What can traders accomplish through their chosen vocation? For one thing, they make a living, they pay their bills. They provide for their families, they save for retirement, they make money for their children’s education. These are the same things that the more noble, long-term investors do.
But here’s the biggest thing that traders do for the markets and for society in general: They keep markets liquid, and by doing so they keep markets more honest than they might otherwise be. They constantly receive and filter information and act on it in the marketplace. Even short-sellers, whom Munger also hates, serve a vital purpose in rooting out fraud and misinformation on the part of corporations and promoters.
On Bitcoin’s Success:
(From my newsletter article of September 17, 2021)
“Of course I hate the Bitcoin success. I don’t welcome a currency that’s so useful to kidnappers and extortionists and so forth. I think I should say modestly that the whole damn development is disgusting and contrary to the interests of civilization.”
- Charlie Munger of Berkshire Hathaway.
Understandably, Munger and Buffett have amassed huge fortunes by investing in companies, by picking stocks. That they would have no need to buy cryptocurrencies is understandable. That they may not even clearly understand them is to be expected as well. But, “contrary to the interests of civilization?” Munger offers no clarification on what he means by that. And to the point that Bitcoin is used by drug dealers and other criminals, yes it is. So is cash. In fact, in 2020 only an estimated .34% of all crypto transactions involved illicit activities. (See The Bitcoin Files Issue No. 1.) Also, criminal activities conducted through the traditional banking system amounted to 2-4% of global GDP, significantly more than with crypto.
Munger has heard that Bitcoin and other crypto coins have been used for illicit transactions, and has done no research to find out that cash and fiat currencies are used in far, far more illegal transactions than any cryptocurrencies are. Again, he hasn’t done the research and he is just wrong.
Link to the September 17, 2021 issue:
Another Munger Prediction:
In 2009, eating lunch at a table with Elon Musk and a half a dozen others, Munger stated that Tesla would die. Today, Tesla is revolutionizing the automobile industry and has a market cap of $950 billion. Its stock has multiplied 300 times in twelve years. Not even a great stock picker gets them all right.
nypost.com photo
Munger and I May Agree on This:
From Munger’s conversation with Rebecca Quick of CNBC -
“The safe assumption for an investor is that over the next hundred years the (fiat) currency is going to zero.”
Now, that’s something all Bitcoiners can agree on. HODL on, friends.
(My) Tweet of the Week:
267,000 views. I must have struck a nerve with that inflation theme. 😀
Issue No. 44, February 18, 2022
Rick Mulvey is a CPA, forensic accountant and crypto consultant. He writes about all things Bitcoin, and yells at the Yankees and Giants. He also runs marathons and makes wine, neither professionally.
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