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The past year has been revolutionary for Bitcoin. And just recently, cryptocurrency hit an all-time high: Over $ 61,000 for a unit – late investors lamented that they missed.
So what does the world’s most famous investor think of Bitcoin?
It’s “probably rat poison squared,” Warren Buffett once said.
If you listen to the billionaire, cryptocurrency might not be the big financial opportunity you’ve been dreaming of, nor the only way to get awesome returns if you want to put money on the market. That’s what commission-free investing apps are for.
“I don’t have Bitcoin. I don’t own any cryptocurrency, I never will, ”he said CNBC in 2020.
Here are three reasons Buffett won’t come close.
1. It has “no unique value at all”
The billionaire investor doesn’t like Bitcoin because he sees it as an unproductive asset.
Buffett has a well-known preference for stocks of companies whose value – and cash flow – comes from the production of objects. But cryptocurrencies have no real value, Buffett said in a CNBC interview in 2020.
“They don’t reproduce, they can’t send you a check in the mail, they can’t do anything, and what you’re hoping is someone else will come and pay you more money for.” them later, but then this person has the problem. . “
Although Bitcoin is intended to provide real value as a payment system, this use is still quite limited. According to Buffett, the value of Bitcoin comes from the optimism that someone else will be willing to pay more in the future than what you pay today.
2. He doesn’t think crypto counts as money
As a tradable asset, Bitcoin has exploded. But does it meet the three criteria of money? According to the most common definition, money is meant to be a medium of exchange, a store of value and a unit of account.
But Buffett calls it a “mirage”.
“It does not respond to the test of a currency,” the billionaire said on CNBC in 2014. “It is not a sustainable medium of exchange, it is not a store of value.”
He adds that this is a very effective way to send money anonymously. But: “a check is also a means of transmitting money,” he said. “Are checks worth a lot of money just because they can send money?”
3. He doesn’t understand it
Buffett has become one of the most successful investors in history by sticking to the stocks he understands.
“I’ve had enough trouble with things I think I know something about. Why the hell should I go long or short on something I don’t know?”
But people like to play, he said CNBC after a 2018 Berkshire Hathaway annual meeting, which is another issue with unproductive assets.
“If you don’t understand it, you are much more excited than if you understand it. You can have anything you want to imagine if you just look at something and say, “It’s magic.” “
How? ‘Or’ What Is Buffett picks winning stocks?
The billionaire investor follows the value investing strategy – which focuses on buying undervalued stocks of strong companies and holding them for a long time.
Simple, right?
Berkshire Hathaway looks for companies with a good profit margin and those that produce unique products that cannot be easily replaced. As Warren Buffett once said in a letter to his shareholders, “It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
But Buffett’s distaste for crypto stocks doesn’t mean you shouldn’t buy Bitcoin. Even the billionaire turned to sectors he had previously spoken out against.
He’s notoriously avoided tech stocks even during the height of the dot-com bubble, and now his company’s biggest stake is Apple.
You can start investing today
Bitcoin has made a lot of people rich along the way. But that doesn’t mean you’ve missed the boat on investing – just listen to Buffett’s words of wisdom.
Found a business you believe in? Even if you don’t swim with cash, a popular investing app lets you buy coins from companies for as little as $ 1.
You can invest in fractions of stocks, options, exchange-traded funds (ETFs) and, yes, even cryptocurrencies. There are no fees or commissions, and when you sign up you’ll get a free share of shares added to your account to get you started.
Or you can buy from businesses with just your spare change, using a different app that rounds your debit and credit card purchases to the nearest dollar and invests the remaining pennies.
If you’re interested, but intimidated, that’s okay. Don’t be afraid to get expert advice before going public. Today, there are certified financial planners who will work with you online to create a personalized investment plan.
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