Leading investor Warren Buffett is well-known for his sharp investment eye and buying companies and acquiring stock and watching values rise over the years.
One sector that Buffett has shied away from is cryptocurrency. Here’s a look at Buffett’s thoughts on cryptocurrency and how investors may have wanted to avoid the Oracle of Omaha’s advice in this particular case.
What Happened: Buffett has been a vocal critic of the leading cryptocurrency Bitcoin (CRYPTO: BTC) for many years. The bearish position of the Berkshire Hathaway Inc (NYSE:BRK)(NYSE:BRK) CEO even made him named Bitcoin enemy number one by entrepreneur Peter Thiel previously.
In January 2018, Buffett warned investors about investing in cryptocurrency.
“In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending,” Buffett said at the time. “If I could buy a five-year put on every one of the cryptocurrencies, I’d be glad to do it but I would never short a dime’s worth.”
A few month later, Buffett took his feelings on Bitcoin further during an interview with CNBC.
Reiterating Berkshire Vice Chairman Charlie Munger’s thoughts that Bitcoin is “rat poison,” Buffett told CNBC anchor Becky Quick that the cryptocurrency is “probably rat poison squared.”
Buffett has said that he wouldn’t buy Bitcoin even if it dropped to $25.
While the billionaire investor has not bought cryptocurrencies and has continued to speak out against them, he does own shares of a company that has bet on Bitcoin and other leading cryptocurrencies.
As Zenger News previously reported, Buffett and Berkshire Hathaway are sharehZenger News in Nu Holdings (NYSE:NU), a Latin American digital bank. Nu Holdings is a crypto-friendly bank and has launched several cryptocurrency products along with allocating a portion of its cash to Bitcoin.
Investing $1,000 in Bitcoin: While Buffett said he wouldn’t invest in Bitcoin even if it hit $25, some investors have chosen to allocate a portion of their investments or holdings in the leading cryptocurrency.
Bitcoin traded between $9,695.12 and $9,964.50 on May 5, 2018 — the day of Buffett’s “rat poison squared” comment.
An investor could have purchased 0.1004 BTC at the coin’s high price of that day.
The $1,000 investment would be worth $3,462.82 today based on a price of $34,490.19 for Bitcoin at the time of writing. This represents a return of 246.3% since Buffett’s comments.
For comparison, shares of Berkshire Hathaway are up 76.2% over the same time period, based on a starting price of $294,720 each.
The SPDR S&P 500 ETF Trust (NYSE:SPY), which tracks the S&P 500 Index, is up 56.8% over the same time period, based on a starting price of $266.89.
As investors can see, Bitcoin has outperformed both the S&P 500 and Berkshire Hathaway since Buffett’s now famous quote about the leading cryptocurrency.
While Buffett has said he wouldn’t touch cryptocurrency even if it hit $25 per coin, investors who bought when the legendary investor made his quote would be glad that they did.
Produced in association with Benzinga
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