Remembering Charlie Munger’s positions on crypto, China
Berkshire Hathaway (BRK-A, BRK-B) Vice Chairman Charlie Munger staunchly opposed investments into bitcoin and other cryptocurrencies, once describing crypto assets as “a gambling contract with a nearly 100% edge for the house.”
Yahoo Finance Senior Business Reporter Ines Ferré breaks down the late Berkshire Hathaway executive’s takes on crypto and his history of investing in Chinese companies, such as EV maker BYD Auto (BYDDY).
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Video Transcript
– Charlie Munger leaves behind a great legacy and a revered investment thesis, but he never shied away from his lack of interest in one asset, crypto.
CHARLIE MUNGER: If you stop to think about it. It’s an ideal currency if you want to commit extortion or kidnapping or have a protection racket– racket or something. Of course, I hate it. I don’t think it’s a– I don’t think it’s good that our country is going crazy over Bitcoin and its ilk. I think the Communist Chinese were wiser than we were. They just banned it. I think it was a huge mistake to allow it at all.
– For more on Munger’s investment timeline, we’re joined by Yahoo Finance’s, Ines Ferré. Hi, Ines.
INES FERRE: Hi, Julie. And as you just heard there, it’s fair to say when Munger spoke about crypto, he made headlines with his zinger lines, bashing on the virtual currency. In fact, he didn’t believe it was a currency at all. In February, Munger wrote an op-ed in the Wall Street Journal titled, Why America Should Ban Crypto, writing, “A cryptocurrency is not a currency, not a commodity, and not a security. Instead, it’s a gambling contract with a nearly 100% edge for the house.”
He often referred to crypto as crap and also used another word which means the same thing, and consider it a swear word. And at the Daily Journal annual meeting, he said, “I think the people that oppose my position are idiots. And so I don’t think there is a rational argument against my position.”
Now, it is worth noting that Munger made no distinction between crypto and Bitcoin, virtual currencies. He did not like any of them and used them interchangeably. And at Berkshire Hathaway’s annual meeting last year, he said, “When you have your own retirement account and your friendly advisor suggests you put all your money into Bitcoin, just say no.”
[CHUCKLES]
BRIAN SOZZO: Wise advice, Ines. And were there some investments that he was really keen on over the years?
INES FERRE: Yeah. Munger was a big believer in the Chinese economy, often speaking highly of the Chinese government and their economy. It’s worth noting Berkshire Hathaway is an investor in Apple, and as we just heard earlier, has also a big presence in the Chinese market. And Munger spoke very well of Apple.
He also was a key decision maker in the investment in BYD in 2008. That’s the Chinese EV maker, competitor to Tesla. And the investment at the time was $230 million. Those shares are now worth about $2.4 billion. In February, Munger said, “I have never helped do anything at Berkshire Hathaway that was as good as BYD, and I only did it once. BYD is so much ahead of Tesla in China.” And fun fact, BYD is short for Build Your Dreams. And it’s fair to say that Munger built many dreams throughout his life.
BRIAN SOZZO: All right, well said. Thanks so much, Ines. Appreciate it.
INES FERRE: Thank you.
