Buffett’s partner is short on Tesla and Bitcoin and continues to hold BYD

publish_time: 2021.02.27

    A few days ago, Buffett’s partner Charlie Munger (Charlie Munger) attended the annual meeting of the company's newspaper Daily Journal and commented on the soaring share price of Tesla and the booming Bitcoin.

    In the past year, Tesla's stock price has soared by 743%, and its current market value is approximately $689 billion. After Tesla announced the purchase of $1.5 billion worth of Bitcoin, the price of Bitcoin continued to soar above $50,000 in the past week.

    When asked whether "Tesla's fully diluted corporate value reached US$1 trillion" or "Bitcoin price exceeded US$50,000" was more crazier, Munger quoted the British author Samuel Johnson (Samuel Johnson). "I can’t tell the difference between fleas and lice." In other words, he is not optimistic about Bitcoin and Tesla, and can't tell which is worse.

    However, in stark contrast to the bearish attitude of Tesla, Munger revealed that he will continue to hold BYD stock. “BYD’s stock price has risen rapidly in the past few years because it is in a very favorable position in the industry and has seized the opportunity of the transformation of new energy vehicles.”

    At the meeting, Munger was also asked whether the biggest threat to the banking industry was Bitcoin or digital wallets such as Apple Pay and Square. He gave the answer: "I don't know what the future of the banking industry is, nor how the payment system will develop. I do believe that a well-run bank is a great contributor to civilization. Central banks all over the world like to control their own banking system. And money supply."

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    With the continuous advancement of scaling solutions, whether Bitcoin will effectively function as a medium of exchange is still unconfirmed. Munger’s view is: “I don’t think Bitcoin will eventually become the world’s medium of exchange. It’s too unstable to be a medium of exchange. It’s actually a man-made alternative to gold. I don’t buy gold, so I never buy Bitcoin."

    Munger advises others to treat Bitcoin wisely. "I hope everyone will not touch Bitcoin like me. This reminds me of Oscar Wilde's description of the fox hunting sport that was famous among British gentlemen at the time-a group of lunatics were chasing something worthless. (The unspeakable in full pursuit of the uneatable)."

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    In fact, the 97-year-old Munger is a well-known Bitcoin critic.

    Compared with the previous comments on Bitcoin, Munger's remarks at this meeting seemed to be somewhat downplayed. At the 2018 Daily Journal's annual meeting, Munger called cryptocurrencies "completely stupid" and called professional crypto traders "disgusting." At Berkshire Hathaway's 2018 annual meeting, Munger likened the crypto market to "transaction junk." In the same event, Buffett also compared Bitcoin to "rat poison."

    At the shareholders meeting in May 2019, Munger stated that he had been invited to participate in crypto asset investment activities, but he refused to participate. Because in his view, these activities are just Bitcoin fans celebrating Judas Iscariot-style carnival.

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    Regarding the current speculative enthusiasm in the US stock market, Munger warned that the capital market is in a bubble and believes that rational investors should wait and see the changes instead of joining the gambling. When asked whether the current market will suffer the same fate as the technology bubble of the late 1990s, Munger said that the bubble will burst in a tragic way, but no one can predict when the collapse will come.

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