Charlie Munger, the investing legend and right-hand man to Warren Buffett, has died, leaving behind one of the industry’s best legacies. He was 99 years old. His death leaves a huge void in the financial industry that will be difficult to fill.
Charlie has been a dominant figure for more than six decades, having helped make Berkshire Hathaway one of the largest companies in the world. With a market capitalization of over $784 billion, it is now the ninth largest company in the world. A significant portion of that market cap, $150 billion, is cash.
Charlie Munger was right about many things. However, along with Warren Buffett, they have missed opportunities over the years. For example, they missed the technology boom that changed the world.
They completely refused to invest in companies like Google, Meta Platforms, Nvidia and Tesla, which now dominate their respective industries. Google is a leader in digital advertising and cloud computing, while Nvidia is the world’s largest semiconductor company. Tesla has developed from a pure startup into the largest car manufacturer.
Berkshire’s investments in technology have had mixed results. The company invested in IBM a few years ago and lost money. The company was a late investor in Apple, which is now its largest holding. The investment in Amazon also came late and was not particularly successful.
Most recently, Munger rejected artificial intelligence (AI), saying he believes in old-fashioned intelligence that has worked well for years.
Munger avoided these industries because he did not have a clear understanding of them. For a long time, these companies grew rapidly but lacked profitability. Munger belongs to the value investing arm of the financial industry, which focuses on free cash flow and earnings.
Charlie Munger was also wrong about Bitcoin, the world’s largest cryptocurrency. Over the years, he has made numerous statements opposing BTC and other cryptocurrencies. He said:
“I’m not proud that my country allows this crap – well, I call it crypto crap.” It’s worthless, it’s crazy, it’s no good, it will only hurt. It’s anti-social to allow this to happen.”
Just as Berkshire was wrong about gold, I believe the company is wrong about Bitcoin. For one, BTC has outperformed it over the past decade. In 2023 alone, Berkshire Hathaway’s stock is up about 20%, while Bitcoin is up 130%.
As I wrote on Tuesday, it always makes sense for value investors to put their money in high-risk, high-growth assets. In the case of Bitcoin, it is becoming a real asset that many people compare to gold. It is also a rare asset with a supply cap of 21 million coins.
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