URGENT NEWS - Warren Buffet declares Bitcoin as a BAD INVESTMENT

[fran2k]

Mail was awful and weird thing 20/30 years ago as well as that thing called Internet.

This is just the beginning guys, don´t know if will be bitcoin or other digital currency, but there is no way back.

[Torque]

"Buffett said he'd advise people to "stay away" from bitcoins because they do not have any intrinsic value, although they are an efficient way to transfer dollars."

Then you can make the same argument of gold, because it was "just" collected in streams or dug out of the ground, although it was an efficient way to transfer money.

Warren Buffett derides gold just as much as he does bitcoin.  Also, anyone notice how Buffett is always asked about bitcoin on the days the stock market takes a beating?  Wonder why? Hmmm. Most would claim "no I don't see the connection" but if you think about it enough, it makes sense.

I.E., Where would those heavily invested in traditional stock markets NOT want to see investors drain $$ from stocks and run to instead for a better investment op?  Anyone?  Bueller?  

[keithers]

would not be surprised at all if Buffett becomes a major holder of bitcoin, while he continues to talk it down.   His investment strategy calls for purchases when people are panic selling...

[Bit_Happy]

How is this URGENT NEWS?
Warren Buffet is old and doesn't understand.

[darkmule]

He really is attacking Bitcoins, he just called Bitcoins a "Mirage", interesting..

He's not "attacking" it, he's just having a different opinion about it. 

"Attacking" Bitcoin would involve something like lobbying to have a law passed against it.

It just does not fit into his model of investment, like gold doesn't.  He is a highly traditional investor, and one of the best of the breed.

And particularly near the end of his life, when he is making investments, he is taking a "long/hold" position where if he dies tomorrow, the people who trusted him with their money can rely on the fact that if they just leave it alone, they'll still be in okay shape in 30 years.

He doesn't know what's going to happen to Bitcoin in 20 years, and frankly, he might be right that it might not exist in 20 years.  It's entirely possible some other cryptocurrency will be so vastly superior to Bitcoin that it will replace it.  If it did, he wouldn't be around to make a decision about that.

So while he might ultimately be wrong about Bitcoin in particular, nobody in their right mind would claim that his general policies on investing are not sound.

[R2Pleasent]

This is Buffet making a prediction on the adoption of a technology.  He is obviously very gifted at analyzing companies and making good investment decisions based on the information he has available.  Coca Cola, Goldman Sachs, etc. are his area of expertise.  Blue chip stocks.  Companies which have strong fundamentals. 

Did Buffet invest in Facebook when they were on the way up?  How about Microsoft?  The companies he knows and understands are not the ones breaking through due to new technology. The guy lives a very modest life himself, and has very little interest in technology.  Look at his office.  He does not have the information to even do correct fundamental analysis on Bitcoin.  Such information is simply not available.

So take it with a grain of salt.  Yes, Bitcoin's value has been largely driven by speculation and based on the real transactions being done on the system, its market cap is very high.  This is the tech industry in a nutshell though.  Companies trade at 100+ P/E ratio.  It's all or nothing most of the time.

I'd like to hear Warren Buffet's analysis on Snapchat 2-3 months before it was purchased for $16B.  I bet he wouldn't have valued it at even $2-3B.  Companies in this sector are very difficult to value.

[darkmule]

Did Buffet invest in Facebook when they were on the way up?  How about Microsoft?  The companies he knows and understands are not the ones breaking through due to new technology. The guy lives a very modest life himself, and has very little interest in technology.  Look at his office.  He does not have the information to even do correct fundamental analysis on Bitcoin.  Such information is simply not available.

This, I think, is precisely why he doesn't recommend it and, in fact, is hostile to it.  As an investor who almost entirely relies on fundamental analysis, he looks at something like Bitcoin and there is nothing there for him to get a grasp on.  I think he's entirely right with respect to his own investment model (at which he has been more successful than almost any living human), but where I think he is wrong is in generalizing and saying Bitcoin isn't a good investment for anyone.

He's been pretty consistent about this.  He doesn't like hedging his bets.  He generally assumes he's made the right decision and is not going to bet against himself.  

It is actually one of Buffett's greatest strengths as an investor that he sticks to what he knows and doesn't delude himself into thinking he's an expert at something he doesn't understand.  I think he is wrong in this specific case, but his general strategy is sound.

[aminorex]

Contemplating a wager:  The peak value of 5 bitcoin during its entire history on bitstamp, measured in USD, at 1:1 odds.  I hold that bitcoin outlasts Warren Buffett.

It's an easy bet to hedge for my counterparty:  Just buy 10 bitcoin today.  If you're right, you lose nothing.  If you're wrong, you win at least the value of 10 bitcoin today, and perhaps much more.

For my side, if I lose, I just pay out about 6 days wages.  If I win, I will probably make about a year's wages.

[aminorex]

It is actually one of Buffett's greatest strengths as an investor that he sticks to what he knows and doesn't delude himself into thinking he's an expert at something he doesn't understand.  I think he is wrong in this specific case, but his general strategy is sound.

He's very good at enterprise valuations and at picking managers, but he has no confidence in currency valuations.  Soros would understand bitcoin much better.  He understands currency fundamentals.  I wonder if Jim Richards thinks of bitcoin.

[bitbouillion]

He is obviously very gifted at analyzing companies and making good investment decisions based on the information he has available.  Coca Cola, Goldman Sachs, etc. are his area of expertise.  Blue chip stocks.  Companies which have strong fundamentals.  

Obviously Buffet made some very bad valuations. Most banks would have gone bankrupt, if the government did not bail them out. They made very bad business, selling shit as top notch investment (e.g. MBS) until it blew up, but got another free ride from the tax payer. Buffet made after the Lehman collapse an even bigger bet on that, without bailouts he would have gone bankrupt too.  

http://blogs.reuters.com/rolfe-winkler/2009/08/04/buffetts-betrayal/

Yes, Bitcoin's value has been largely driven by speculation and based on the real transactions being done on the system, its market cap is very high.  This is the tech industry in a nutshell though.  Companies trade at 100+ P/E ratio.

You can't compare a technology with a corporation. And bitcoin is not just a technology, but a revolution - that's why so many people don't understand it.

[R2Pleasent]

He is obviously very gifted at analyzing companies and making good investment decisions based on the information he has available.  Coca Cola, Goldman Sachs, etc. are his area of expertise.  Blue chip stocks.  Companies which have strong fundamentals.  

Obviously Buffet made some very bad valuations. Most banks would have gone bankrupt, if the government did not bail them out. They made very bad business, selling shit as top notch investment (e.g. MBS) until it blew up, but got another free ride from the tax payer. Buffet made after the Lehman collapse an even bigger bet on that, without bailouts he would have gone bankrupt too.  

http://blogs.reuters.com/rolfe-winkler/2009/08/04/buffetts-betrayal/

Yes, Bitcoin's value has been largely driven by speculation and based on the real transactions being done on the system, its market cap is very high.  This is the tech industry in a nutshell though.  Companies trade at 100+ P/E ratio.

You can't compare a technology with a corporation. And bitcoin is not just a technology, but a revolution - that's why so many people don't understand it.

Well, if all the banks collapsed, then a lot of people in the United States would likely be bankrupt right now.  Buffett is not accountable for the financial collapse simply because he is an investor.  Most of the business practices of those companies were masked as low risk.  Without insider information, it would be quite difficult to know how they were bundling those loans.  The people bundling them didn't even understand them a lot of the time.

As for the Bitcoin being a technology as opposed to a corporation, sure I agree.  But what we are talking about is the value of a Bitcoin here.  This value is what the market is willing to pay for a Bitcoin at a given point in time.  This value is based on something.  Whether it is the future potential of the technology, its scarcity, or more realistically a combination of many factors, it is still based on something.

To say it's a revolution and it's going to replace fiat, I'd say that's retarded.  Governments aren't going anywhere.  So long as they are in power, they will encourage the use of their own currency.  At the moment, Bitcoin is not a threat to the dollar.  If that changes at some point, it will be a very easy fix for the government.  Just do what China did.  Outlaw using Bitcoin to purchase consumer goods.

Bitcoin needs to find a way to complement the USD and other currencies.  It's not going to overthrow the financial system. 

[bitbouillion]

I never said bitcoin is replacing fiat anytime soon. Nonetheless it's a revolution in the financial world.

Also, why didn't Buffet see it coming, when other did? He acted more like an oligarch than a genius capitalist.   

[ZiG]

And why we should assume that whatever Buffet is telling the public is TRUE...?

He could simply tell us lies...to push the price down...so he or his buddies from Wall Street (Goldman SUCKS and co.) could BUY some cheap coins...WHY NOT...?

Specially after the referendum in Crimea...?!?

[testcoin]

And why we should assume that whatever Buffet is telling the public is TRUE...?

He could simply tell us lies...to push the price down...so he or his buddies from Wall Street (Goldman SUCKS and co.) could BUY some cheap coins...WHY NOT...?

Specially after the referendum in Crimea...?!?

Yes everyone can tell lies.

But after reading the source article from coindesk.com, it seems that Warren Buffet only said "Bitcoin is Not a Currency", which is something that I do also agree with.

So just relax, Buffett is famous for avoiding tech stocks anyway. You basically don't need any related investment advice from him if you are keen on technology.

[Grinder]

Obviously Buffet made some very bad valuations. Most banks would have gone bankrupt, if the government did not bail them out. They made very bad business, selling shit as top notch investment (e.g. MBS) until it blew up, but got another free ride from the tax payer. Buffet made after the Lehman collapse an even bigger bet on that, without bailouts he would have gone bankrupt too.

Buffett doesn't borrow money to buy shares so Berkshire Hathaway will be fine even if some of the businesses it owns goes broke.

[darkmule]

Well, if all the banks collapsed, then a lot of people in the United States would likely be bankrupt right now.  Buffett is not accountable for the financial collapse simply because he is an investor.  Most of the business practices of those companies were masked as low risk.  Without insider information, it would be quite difficult to know how they were bundling those loans.  The people bundling them didn't even understand them a lot of the time.

Buffett's investment strategy is such he'd probably survive anything short of a world-ending catastrophe.  It's very often based on companies that have physical infrastructure that would still be worth something even if, say, the dollar itself collapsed.  He's also pragmatic enough to be aware he's not going to be alive for much longer, and isn't going to go for investments that require micro-managing them.  Bitcoin is highly volatile, whatever else you might say about it, and requires you pay attention to it.  Being dead isn't conducive to that.

I think he is in error basically disparaging it as an asset, but I can see where he's coming from.  We're really not the audience he's aiming his advice at, though, and it's probably reasonably good advice to that older audience.  It's generally good advice not to invest in something you don't understand, and if you're older and haven't been familiar with the concept of cryptocurrency since the 90s or so, you probably do not understand Bitcoin.

[knightcoin]

[loszhor]

    I respect the opinions of people who know the financial sector when they doubt Bitcoins when they are sincere, of course. I think Buffet and some others are right when they keep saying Bitcoins are not money. Lee Dorn, from YouTube, makes a good point that they are more of a commodity than money since the prices fluctuate and it's difficult (for now) to directly buy something and know the correct prices day to day as opposed to if you used dollars. An observation I have is that alt currency in general is more a form of bartering than outright currency exchange.

    Starting this year I and some other friends of mine started trading alt currency as opposed to stocks and the impression is that they are more of penny stocks from start ups that swear they will be the next big tech company just invest some time and money or in this case time and hash power and your "shares" will make you rich quick. There are just so many classic pump and dump schemes going on with the new coins that that would turn anyone off but then again how many crap companies get traded right now on the stock market? I think it would be better if we treat them more as stock and/or commodities than money and that would fix a lot of impression people have. I see too many people discussing how they are going to mine coins and make money without any plan and they obvious started with the intent that once they had some coins that automatically meant they had money versus if someone bought stock or gold they understood they couldn't go to a store use buy something directly with it.

    Back to what a lot of financial bigwigs think about BTC. It's new and much of it is either not their forte, they are putting on an act so they can get it themselves, or it's simply just competition and they want you support their industry. I think Mr. Buffet falls into the "knows little about it" category, he does have years of experience in his field but even those in the financial section admit that some his methods are outdated. Others that I think that are more disingenuous and are merely protect their interests would be someone like Peter Schiff who knocks bitcoins and then tries to sell you gold. If people take their money out of things like gold, stocks, etc and put it into a competing market that obviously hurts their interests and no one like competition.

[counter]

Even Bigger Breaking news Warren is scum and shouldn't be trusted by anyone.  He has said he knows little about the topic in the past but says it's is a bad investment don't trust known liars!

[superresistant]

This is great