Crypto Warren Buffett - Crypto will almost certainly come to a bad ending.

Looks like these guys have not realised bitcoin and cryptos have been around for years.
We have heard it all before. The bubble popped back in 2013 when bitcoin crashed from over a $1000 to $200, it was all over already. I remember the articles and the "experts", all saying how that was the end of it. Well, well turns out they were wrong - again.

When the inevitable correction occurs, there will be plenty of "I told you so", just like last time.
Then fast forward a few months/years and I would not be surprised to see valuations rise again and reach new highs. At which point, the well meaning participants will again warn everyone how it's a bubble that is about to crash and burn and to "be careful".

When you've been around more than 5 minutes, you realise how amusing this is, as it's just a repeat of the past. It seems to always be coming from people who have no skin in the game, which is quite a mystery to me.

 

I dint understand Crypto and I'm sure there will be tears of pain for some, but it appears there will also be others that may shed tears of joy on the packet they have made , or make

Even the Oracle admits he's not always 100% correct

Warren Buffett: I was wrong on Google and 'too dumb' to appreciate Amazon

Though I wouldn't like to bet against him

 

@Ouga Personally I hope you crypto people make a killing mate. The tone of that post comes of a little defensive, not sure why. Anyway I think its hard to ignore the fact that the 'risks' with crypto are not 'normal' risks. Even if one thinks they will just hold when the markets are rumbling, well, its very hard to hold when your capital has gone down 50%. A lot of people will panic and sell. I don't think my earlier comment of 'just be careful' is one to scoff at. But your right, I have no skin in the game and know nothing about crypto. But when you have fluctuations of 20% plus on a daily basis sometimes, its not too hard to gauge risk.

All the best mate.

 

I looked at it like a casino flutter or if I bet at the races - all the money put in was a gamble that I didn’t expect back.
I also looked at it as a fee to pay to learn about the underlying technologies.
Therefore to me, any money I made after getting the initial amount back is “fun money”.
The amount left that is still in the game is to see what happens- to keep my attention on which technologies do well and who loses out.

 

Ouga its the people that missed out that are hurt.

 

Yes I get that, many people are looking at it that way and only putting in what they can afford to lose. Makes sense. I am more referring to the people who think they have an investment strategy where a large amount of equity is put in. I found WB view interesting. He knows nothing about the crypto and yet has quite a strong view on it. Perhaps its worth taking his view into account (based on his overall investing credentials) is all I'm thinking.

 

Applies to all markets. One needs supreme confidence in their asset diversification to hold their ground in a sea of red.

Those who panic-bought on the way up will likely panic-sell on the way down; nothing much can be done about that.

 

I agree, though I do think with other assets, the stability is a lot more tested. Its unlikely to see real estate (or even ETFs) drop 50% unless in highly speculative markets or massively overpaying. I really think not all markets are equal when it comes to risk, hence the possibility in quicker, larger returns versus the opposite of that.

 

I think WB is right. It is going to end badly.

Hell, if you got into crypto in December it has already ended very badly indeed.

Crypto is here to stay though. It's a genuinely good idea and will eventually "grow up".

As for being a poor investment...well it depends on when you got in and how much you went in with and if you've cashed out along the way.

Putting in 1k into the best coins when you have a lot of other investments is hardly taking on a lot of risk....The future reward may well be worth it. If not, then it's 1k. No biggie.

It's like anything I guess. Always have an exit strategy and be careful.

 

+1

 

Sometimes if you are a bag holder, then you may well take a big loss if you sell either in a panic or slowly.
I did a bit of a walk down memory lane to the dotcom boom and looked up the Janus Global Technology Fund. It was one of the most aggressive investors in the dotcom boom
Global Technology Fund | Janus Henderson Investors
Click on the max timeline of the hypothetical returns for $10000 and it shows the effect of the dotcom boom and bust.
If you bought into the fund at the top of the bubble in early 2000, you would have had to wait until March last year to make back your money (which is of course still a big loss after inflation, cost of capital, opportunity costs, etc are factored in).

 

Yep one of these corrections will be both a big one and the last one. Buying in at obvious highs is a great way to increase your chances of riding the slide all the way to the bottom

 

Crypto's are the new kids on the block. OK they've been around for a few years when that mysterious Jap guy started it off with block chains and whips n leather.

Anyway, the thing is the more money that goes Into crypto currencies the less money goes into conventional investment stuff like stocks.

And that's where these big knobs miss out. Of course they're negative about it. They're probably scheming a way to make the crypto crash.

I think Buffet is playing dumb. He's probably invested heavily into cryptos and made his money already. Surely his advisors would have told him years ago "Hey, Wazza, slap half a bill on these Crypto things, you'll double your money in three weeks"

 

The trick now is to pick the Amazon's, Apple's Microsoft's and Google's of the crypto world.

Here's an interesting article on the matter. PIOnline : Subscription Center

"
Among the largest 15 companies in the index back in 2000, only four remain in the top 15 today: Microsoft, Cisco, Intel and Qualcomm.

Over the entire 781-week period, only Qualcomm and Microsoft stocks had positive returns -- up 1.54% and 1.34% annually, respectively. Cisco's stock had a cumulative return of -52.5% (-4.8% annually) and Intel was down 24.63% (-1.9% annually)."

Not the best returns. Google didn't IPO until 4 years later. So that leaves Apple and Amazon.

So, do you think you could have picked them? Of course, I've taken a punt on half a dozen coins myself, but hindsight is 20/20.

I agree that the technology has huge potential, just as the internet (obviously with hindsight), presented in the 90s. But you couldn't invest in the internet itself, and the vast, vast majority of companies trading in the dotcom boom have all but disappeared.

 

Interestingly, with Amazon's share price
AMZN Historical Prices | Amazon.com, Inc. Stock - Yahoo Finance
It doesn't do much in the years after the dotcom bust and doesn't reach its dotcom peak of late 1999 until late 2007 and doesn't stay above it for good until about 2009.
So the trick will not to only find the Crypto Amazon equivalent but to be able to time when to get in to skip the surviving but not booming part.

 

Spot on. Hindsight is wonderful. And further; Wazza knows his own “circle of competence” and sticks to it. Most vastly overestimate theirs. Those that dismiss what the likes of Buffett say because it doesn’t fit the narrative they wish to believe do so at their own peril.

 

We are still talking about a minuscule number of people invested in cryptos, not millions. So it is a frenzy of tens of thousands right now. May be by end of 2018-20 you will have broader market get in and that may be good time to get out. So getting in now and learning to identify good vs bad investments is an advantage.

 

6 years on, here we are at AUD$100k.
Hasn't been too bad so far.

 

lol, indeed

 

Get ready for the property gains! When equities and crypto reach ATH, property inevitably takes those gains