Benzinga – The late Charlie Munger, esteemed vice chairman of Berkshire Hathaway Inc., had a history of expressing strong opinions against cryptocurrencies, particularly Bitcoin. His views were notable for their intensity and the sharpness with which he delivered them.

At Berkshire Hathaway’s 2018 annual meeting, Munger’s criticism of cryptocurrencies was forthright. He referred to the act of trading cryptocurrencies as “disgusting,” likening it to trading in turds, and suggested that it reflected poorly on civilization. He also used strong terms like “dementia” to describe the growing enthusiasm for cryptocurrencies.

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“I think the people who are professional traders that go into trading cryptocurrencies, it’s just disgusting,” he said. “It’s like somebody else is trading turds and you decide, ‘I can’t be left out.’”

In an interview with Yahoo! Finance following the shareholder meeting that year, Munger criticized cryptocurrency traders as participants in a get-rich-quick scheme, contributing little to civilization. He expressed his distaste for the burgeoning market, highlighting his belief that it was regrettable that the U.S. hadn’t banned cryptocurrency trading. Munger admired China’s approach to cryptocurrencies, noting the country’s ban and considering it a wiser approach than the U.S. stance.

His scrutiny didn’t spare the nature of cryptocurrencies. He has been quoted as saying that cryptocurrencies, including Bitcoin, are likely to go to zero and have no intrinsic value. He emphasized the high volatility and lack of regulatory frameworks as major concerns. The 99-year-old billionaire was troubled by the use of cryptocurrency in illegal activities like drug dealing, terror funding, kidnapping and extortion.

He went on to use the extreme analogy of trading in freshly harvested baby brains to underline his disapproval.

“Suppose you could make a lot of money trading freshly harvested baby brains,” he said. “You wouldn’t trade them, would you? It’s too awful a concept. To me, Bitcoin is almost as bad. … I regard the thing as a combination of dementia and immorality. And I think the people pushing it are a disgrace.”

Despite his criticism, it is interesting to note that Berkshire Hathaway invested in companies involved with cryptocurrencies. One such investment was in Nubank, a South American fintech firm offering various crypto services, showing a recognition of the growth and interest in the virtual digital asset sector.

For people who are skeptical about cryptocurrency or prefer not to engage with its risks, numerous other investment opportunities are available. While cryptocurrency has gained a reputation for potentially rapid wealth creation, it’s not the only avenue for investing in emerging innovations. Startups offer a different path to invest in potentially groundbreaking ventures. These investments can provide a way to be part of the next major trend but with less volatility compared to cryptocurrencies. Anyone can invest in startups with as little as $250.

Munger’s stance on cryptocurrencies was consistent through the years, marked by strong language and a clear viewpoint against the digital asset class. His opinions contributed to the broader debate on the role and legitimacy of cryptocurrencies in the modern financial system.

The investment philosophy he championed emphasized the importance of patience and a long-term view, often advising investors to focus on a handful of great companies and “just sit on your ass.” He believed in loading up on a few key insights rather than pretending to know everything about every investment opportunity.

One of his most impressive investment feats was turning a $1,000 investment into over $1 million in oil royalties. In the early 1960s, Munger teamed up with unemployed friend Al Marshall to invest in oil royalties. Munger’s legal expertise and strategic approach in structuring the deals played a crucial role. The investment yielded a steady source of passive income for Munger and showcased his ability to identify undervalued assets and capitalize on them​​.

Munger’s approach significantly influenced the investment world, emphasizing the value of long-term, quality investments over short-term gains​​.

© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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