I spent the last year (and a bit more) away from my family in Australia (dividing my time between India and UAE). I am back in Australia now. In India, I had gone to tend to my mother’s needs and spend some time with her. Ever since I left Indian shores for work abroad (close to half a century ago), I’d never spent much time with my mother. So it was intentional, then one thing lead to another, and with COVID travel restrictions (India/Australia), I got holed up in India for about 6 months.
It was a period of reminiscing and retrospection about how things have changed in the place where I’d grown up. Interactions with my mother enlightened me on how things could change for me if I live as long as she is now (she is 93) and how we all need to adjust to the changing times.
My mother was a very efficient person. After the demise of my father 30 years ago, and even before that, she has been good at managing the family wealth and creating wealth for her children and grandchildren. She made wise investments in real estate and allowed the only stock investment my father did for $50 to grow up to more than $250,000 (without counting any yearly dividends - The stock was ITC and the dividends were nice). It is only very recently that she finished bequeathing all that within the family.
Since my father died, she was lonely and wanted to be in regular touch with her children and grandchildren. I bought her a very nice smartphone and try to educate her with a lot of patience but alas it never worked. Though she is highly intelligent, she is not tech-savvy. She desired to see and talk to her children and grandchildren on WhatsApp. But she just couldn’t operate the phone with ease and felt especially frustrated when she knew her grandchildren and great-grandchildren could do it. Though she never used the phone, she kept it safely with her. Every time when I talked to her, she reminded me about the phone. One day I told her why don’t you give that to your chauffeur. He will make good use of it and it can be useful to you as well. Though hesitant initially, she gave it away. Whenever the chauffeur comes home, she can see and talk to her children, grandchildren, and great-grandchildren on WhatsApp. The driver is happy, she is happy and so is everybody else. You may be wondering why am I telling you this story.
Many a time, we fail to comprehend how to take advantage of technology to our benefit. We are so stuck with our fixed mindset and patterns of thinking. Very recently, the annual Berkshire Hathaway concluded in Omaha, Nebraska. Warren Buffet, 92, and Charlie Munger, 98 were in great form in rattling off about their business achievements. What they also did was brandish their knives to take a dig at Bitcoin and other cryptocurrencies.
One of Buffett’s main statements was, “The one thing I’m pretty sure of is that it doesn’t produce anything, it isn’t worth anything”. In a public display of ignorance, he further elaborated on his disdain for Bitcoin. He said, “Now if you told me you own all the Bitcoin in the world and you offered it to me for $25, I wouldn’t take it because what would I do with it? I would have to sell it back to you one way or another. It isn’t going to do anything. Understanding value and function is going down a rabbit hole. Very soon I will be writing a series on cryptocurrencies and their use cases.
In 2017, Buffett admitted that he made the mistake of missing out on high-tech stocks like Google, Apple, and Amazon. He couldn’t understand how they would make money and continue to make money over the long term. He also admitted that he and his partner Munger missed a lot of things and will still continue to miss them. Buffett is not an arrogant person. He doesn’t engage in ostentatious wealth displays; he is very humble and quick to admit his mistakes. He has openly confessed that he doesn’t understand technology companies and he avoids them for that reason.
No doubt he looked very smart during the dot.com bubble but totally missed out on the Internet revolution that took off after that. If it was not for his sizable late investment in Apple, Berkshire Hathaway’s performance in the pandemic year would have been embarrassingly pathetic.
Why would Buffett and his partner keep throwing shades at something which they admit to not understanding? Why wouldn’t he take the time to educate himself on every argument and perspective (both for and against) from people closest to the subject matter (producers and consumers), setting aside preconceived notions and prejudices?
Don’t get me wrong. I have great respect for Buffett and Munger. Their writings have greatly advanced my understanding of long-term investing, compounding, and the insurance sector dynamics.
Technological innovation can be incremental or disruptive. While I don’t own any Bitcoin myself, it has ushered in the third generation of the internet and spawned decentralized protocols and applications. They have sprawling use cases in financial services. Something that would materially affect many of Berkshire’s financial holdings in the near future.
Ethereum is a protocol that enables not only peer-to-peer monetary exchange but also financial derivatives, property titling, and non-fungible tokens (NFTs).
Take the case of Ripple/XRP where I have a material interest. XRP enables any two fiat currencies can be exchanged anywhere in the world for a fraction of the existing costs in just seconds. What is the value of that technology? We really cannot fully fathom that at the moment.
Munger’s comments on Bitcoin were more telling. He said, “in my life, I try and avoid things that are stupid and evil and make me look bad in comparison to somebody else. Bitcoin does all three”.
Blockchain technologists and their customers would probably laugh off or ignore these jibes. It took the duo decades to finally invest in Apple. I hope they live long enough to see and experience the fruits of this technology as it progresses.
If you received value from this post, and you’d like to send some back, or if you’d like to signal to me to continue spending time on these types of explorations, feel free to buy me coffees (thank you!):
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Abraham George is a seasoned investment manager with more than 40 years of experience in trading & investment and multi-billion dollar portfolio management spanning diverse environments like banks (HSBC, ADCB), sovereign wealth fund (ADIA), a royal family office and a hedge fund. Currently, he is a co-founder of a new hedge fund where foreign citizens can invest in Indian growth stocks like Tanla operating in hyper-growth markets like CPaaS.