Monday, February 25, 2019

Warren Buffett Says Bitcoin is a 'Delusion' and 'Attracts Charlatans'

Warren Buffett
Billionaire investor Warren Buffett went for the heavy smackdown against bitcoin this morning.

"Bitcoin has no unique value at all," Buffett told CNBC's Becky Quick in a "Squawk Box" interview. "It is a delusion, basically."

"It attracts charlatans," Buffett said. "If you do something phony by going out and selling yo-yos or something, there's no money in it — but when you get into Wall Street, there's huge money."

This isn't the first time Buffett has slammed bitcoin.  He called bitcoin "probably rat poison squared," ahead of the 2018 Berkshire Hathaway annual shareholder meeting.

Buffet has a point.

I put the below video out when bitcoin was trading around $15,000. It is now under $4,000.

Check out the comments to the post.



  1. As if no other investment has ever seen a 75% decline in value. That bitcoin is down is not evidence that it is "rat poison squared". It has had several major declines of this order and come back each time. Volatile it is.

    But it is no worse than the U.S. dollar with respect to having something of lasting value behind it. Both are backed by exactly nothing. But the Fed can create an unlimited quantity of dollars. Not so with bitcoin.

    In the coming inflation there may eventually be a stampede out of dollars into anything that that is not someone else's obligation and is limited in quantity. Bitcoin fits that role and has advantages over, say, gold regarding transportability, security, and such. Having some bitcoin, or some other cryptocurrency, as a small part of one's portfolio may be prudent.

    And Wenzel says to buy on the way down, otherwise you won't get some at the bottom. Bitcoin has leveled off, so this may be the bottom. Or it may not. So ease into it.

    1. I have not said buy on the way down for bitcoin.

      You need to listen to my other video, there are different types of declines:

    2. Sorry, Bob, I didn't mean to imply you ever advocated buying bitcoin, far from it. For investments whose fundamental reason for holding is unchanged, you have advocated continuing to buy even if the price declines; I just applied that advice to bitcoin assuming my reason for holding is sufficient; you do not find sufficient reasons to hold bitcoin while waiting for the next significant advance. I have a lot of respect for your investment advice in the EPJ Daily Alert, my EPJ portfolio has done reasonably well and I'm comfortable holding it. I'm a disciple!

      A good video to review, that one. No doubt about it, bitcoin has seen several bubbles, so it would seem to be a "periodic bubble", though with cycles of less than five years ("Internet time"?).

      In addition to the four reasons you give in the video for a bubble bursting, a possible factor in the bursting of the bitcoin mania in late 2017 may have been the selling of large amounts of bitcoin by the trustee of the Mt Gox bankruptcy proceedings. But you were right in expecting it to decline by at least 50 percent. Whether you are right in predicting it will never recover remains to be seen; as you acknowledge, it could go to a million dollars.

      What are the chances bitcoin will recover at all? I think reasonably high, you think low, but we agree that bitcoin does not belong in an investment portfolio. In the video you gave one more reason that it could tank again: in a recession the "whales" (owners of large amounts of bitcoin) could sell their stakes to raise money to save other parts of their portfolios. The list of risks could be made quite long, I'm sure.

      But the one fundamental reason for having at least a small position I've given above: they're not making any more (okay, technically, they're making them at a small, predetermined rate). That could be all that's needed to start the next mania in a serious inflation. Holding bitcoin is clearly a speculation not an investment. Such a speculation may appropriate for some, but not all.

      I like bitcoin as a speculative inflation hedge in addition to the usual metals and miners. You are not in the business of advising on speculations, so I understand why it is not to your liking. But if my fundamental reason for holding it comes to pass, then the return on investment could be spectacular. Surely there are some for whom this speculation is appropriate.