Famed and legendary commodities investor, Warren Buffet carries the image of your friendly neighborhood go to uncle for pro investing tips. Yet crypto enthusiasts are caught in a mix as he says “bitcoin is an asset that creates nothing” and “buying bitcoin is gambling, not investing”. This article does not intend to criticisize Buffet’s investing methods, rather we briefly analyze his many other stock investment decision over the decades to improve our own crypto investment methods.
Famous for buying up Coca Cola on the cheap in the 1980’s and getting ~11% annualized returns for the next 27 years; numerous missed opportunities may come as a surprise. Best buy opportunities of Facebook, Amazon, Netflix, Google (FANG stocks) were all missed in hindsight. An investor of his acumen, Buffet is often portrayed as a specialist in commodity stocks but not even one when it comes to tech stocks. This is where insights into his strategy reveal the limits of his investment style.
It’s only in hindsight that missing out on the FANG stocks seems like a big lost opportunity. It surely is. In his own words at the recent shareholder’s meeting of Berkshire Hathaway, he missed out as these companies were trying to achieve a business miracle. Since miracles carry high chance of failure, investing in those ideas carries high risk which is surely offsetting to the seasoned investor who can find value at far lesser risk. Here in lies the discrepancy with his analysis of cryptocurrency. Blockchain& Bitcoin are a miracle. Though it is surely debatable if it’s too late to get into Bitcoin, yet blockchain technology & real world applications are just beginning to establish themselves. These are miracles unlike anything previously seen in the world of high tech. The various business projects of various sectors that succeed over their competitors will eventually exhibit exponential growth and perhaps even becoming FANG’s of tomorrow, unless acquired by one of the FANG’s themselves.
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