Read Part 1, Part 2, Part 3 and Part 4 if you haven’t already.
The reason for shunning cryptos without making any research are many. Firstly Bitcoin commands more than 40% of the market cap. There are very few people who have really made the efforts to understand Bitcoin, its history, its functioning, the purpose that it could serve, etc.
Many celebrities and very successful individuals in other areas of finance talk mostly about Bitcoin when they address cryptos.
It is like saying Kleenex when you want to talk about tissue papers. Kleenex is only one of the trademarks in the tissue paper industry. But since Kleenex was the pioneer tissue paper company and they became so ubiquitous, the generic name used for tissue papers is Kleenex. The same situation applies to Bitcoin. Bitcoin was the first crypto to come on the scene in 2009 and when people talk about cryptos they always refer to Bitcoin. Of course, cryptos got a lot of bad rap due to many pump and dump schemes and badly thought out projects. To top it, many exchanges have been hacked too.
With all this, one should not be throwing the baby out with the bath water. In fact, I will go a step further and not label the name crypto with the projects that I am involved in. I would just like to call them digital assets and not cryptos. That makes a lot of difference.
Warren Buffett and Charlie Munger are by far the most successful investors in equity markets in terms of their presence and longevity. They both are in their 90s and still very active. They are very passionate about what they do.
Warren Buffett probably has the most number of quotes on financial wisdom in the industry and they are always used widely in the markets. What I have also noticed is if someone is not sure about a quote’s author it will be mostly assigned to Albert Einstein or Winston Churchill😊. Anyway, they are not alive to refute it or admit it.
If you had invested $10,000 in the S&P 500 in May 1965 the same year Warren Buffett took the helm of Berkshire Hathaway and reinvested the dividends it would’ve been worth approximately $3 mln at the beginning of this year. Not bad for a $10,000 investment.
But if you had invested the same amount in Berkshire itself your $10,000 would have grown to more than $364 mln. How many of you would want to attribute the $361 million difference as pure luck?
If that was the case you are also saying Buffett is an average guy who didn’t understand much about balance sheets, income statements, corporate governance, or macro or stock valuations.
And this year who has been buying when everyone has been selling? You guessed it. None other than the Oracle of Omaha - Warren Buffett - himself. In Q1 alone, Buffett spent $51 bln on stocks. He also sold $10 bln dollars worth of stocks but net-net, he bought $41 bln during the quarter. And that’s after sitting idle on his mountain of cash worth $150 bln for two years.
Buffett is famous for his homespun, folksy wit and puerile fondness for junk foods like McDonald’s burgers and cherry Coke but every year Buffett holds a charity auction lunch for three hours for anyone who pays the highest price. These lunches go for millions of dollars and you can pick his brain on investments for the three hours that you are with him. In 2019, crypto entrepreneur Justin Sun paid over $4.5 mln to have lunch with Buffett. The proceeds of all these lunches go to support San Francisco’s Glide Foundation one of Buffett’s favorite charities that helps with homeless and drug addiction in the Bay Area.
Though he doesn’t look like a superhero he has many a times come to the rescue of the markets. During the GFC, he came to the rescue of Goldman Sachs when Lehman collapsed and he rescued GE with an investment of $3 bln. He was also involved to rescue LTCM in 1998 while he was on holiday with Bill Gates but eventually, the Federal Reserve stepped up to solve the problem.
Even at 91, Buffett is mentally sharp and on point. He is very humble, honest, willing to admit his mistakes, and very ethical. Due to his closeness with Bill Gates and Gates being a board member of Berkshire, Buffett never invested in Microsoft.
But with all his wisdom in many areas of finance, I don’t think he understands tech and crypto as much as he should. He missed investing in Google and Amazon. He criticized them both but later admitted that it was a big miss to not have invested. He even criticized Apple for a long time and much later understood that Apple is a great investment. If it was not for his investment in Apple, the year before last year would have been a disastrous year for Berkshire when they made a loss to the tune of almost $55 bln. Now Apple constitutes almost 42% of the Berkshire portfolio. Stay tuned for more in this series!
Continue to Part 6
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!):
So, there we go. Thanks for reading Breezy Briefings. If you enjoyed this, I'd really appreciate it if you could take a second and tell a friend. Honestly. It makes such a big difference.
Forward this email. Recommend the newsletter. Share on Twitter, WhatsApp, Telegram, LinkedIn, Slack, wherever!
Join Breezy Briefings’ Official Telegram Channel: https://t.me/BreezyBriefings
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.