Buffett Still Bearish On Bitcoin: 'The Asset Itself Is Creating Nothing'

Joann Johnston
May 8, 2018

Fellow billionaire and Gates pal Warren Buffett said the largest cryptocurrency is "probably rat poison squared" at Berkshire Hathaway Inc.'s annual shareholder meeting on Saturday.

On Saturday, Buffett said Berkshire's reputation stands on its own, so much so that when he's gone, the company "will continue to be the first call".

His company now has a 5% stake in Apple worth around $11 billion. Mentally, they're sharper than any of us.

Buffett has built Berkshire Hathaway from a dying manufacturer of suit linings into a almost $500 billion conglomerate - measured by market cap - that is one of the most formidable economic enterprises in the world.

Mr. Buffett opined: "Cryptocurrencies will come to a bad ending".

And, just as a flawless counter example to Bitcoin, Apple checks every box on Buffett's list of a real investment that produces real things.

He said investors now are much better off owning USA stocks, whose prices are elevated but not in a "bubble", and it would take a "nanosecond" for him to choose stocks over 10- or 30-year US government bonds now yielding around 3 percent.

Buffett said most of Berkshire's businesses are hiring, and several of them are having trouble finding workers.

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The recovery in the share prices makes it less opportune for Apple's corporate treasury to execute purchases as it proceeds with an additional $100 billion of buybacks in an effort to further winnow down its mountain of cash. "With the passage of a little time, we may own six or seven per cent".

Of course, providing "a trustless line of defense for when trust erodes" is one of the very foundations upon which Bitcoin and other cryptocurrencies have been built.

However, this doesn't seem to be enough for the Berkshire Hathaway chairman and CEO.

While Buffett said it does seem like more moats have become susceptible to invasion recently, he still observes plenty of companies, such as Berkshire's See's sweets unit, where they're holding firm. On the other hand, Buffett acknowledged a blind spot when it comes to tech, admitting that he felt similarly incredulous about Amazon: "The problem is, when I think something will be a miracle, I tend not to bet on it".

"When I buy Apple, I know that Apple is going to repurchase a lot of shares", he said. Well, I love the idea of having 5 percent go to 6 percent.

"You've got to win with the consumer", Buffett said.

Neither Buffett nor Munger use the iPhone, but someone recently sent one to Buffett.

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