In 2018, Berkshire Hathaway CEO Warren Buffett called bitcoin “rat poison.”
His longtime investing partner, Charlie Munger, said the crypto markets are “dementia” and compared them to “trading turds.”
And they’re not alone in that sentiment. In 2017, JPMorgan Chase CEO Jamie Dimon called bitcoin a “fraud” and said investors that buy it are “stupid.”
So, it’s no surprise that in a JPMorgan survey of institutional investors released earlier this week, 33% agreed with Buffett that bitcoin is “rat poison.” And 16% believe it’s just a “temporary fad.”
Many investing firms love to hate bitcoin. After all, their complex stock analysis and billion-dollar budgets don’t seem as important when Average Joes are making lots of money trading cryptos.
But they’re wrong: Bitcoin isn’t “rat poison.” And today, I have the charts that show bitcoin puts these firms’ performance to shame.
It’s Tough to Beat Bitcoin
No doubt, Warren Buffett and Charlie Munger are some of the greatest investors ever. But even they can’t beat bitcoin.
After Buffett’s and Munger’s name-calling, bitcoin rallied 254%. Meanwhile, Berkshire Hathaway Inc. (NYSE: BRK.B) is only up 40% over the same time frame.
The chart below shows the performance of bitcoin (the blue line) and BRK (the red line). The green line is the S&P 500 Index, which gained 59%.
Bitcoin vs. Berkshire Hathaway and the S&P 500: 2018-2021
(Source: Barchart.)
As you can see, bitcoin has crushed Berkshire Hathaway’s performance, even after its recent downturn. Further, the investment firm hasn’t even been able to keep up with the S&P 500.
So, maybe it’s time to start asking investors if Berkshire Hathaway is “rat poison.”
And the situation looks even worse for JPMorgan’s Jamie Dimon, who trashed bitcoin when it surged in 2017.
After he warned that investing in bitcoin “won’t end well” and called people who bought it “stupid,” the crypto soared 673%.
JPMorgan Chase & Co. (NYSE: JPM) is only up 65% since then under Dimon’s leadership, while the S&P 500 has gained 69%.
Bitcoin vs. JPMorgan and the S&P 500: 2017-2021
(Source: Barchart.)
It would be disrespectful to call investors that bought JPMorgan stock “stupid.” But it’s worth noting that shareholders would’ve done better buying a simple index fund instead.
I’ll also point out that Dimon’s salary in 2020 was $31.5 million. That might seem high for a CEO who has failed to help his company adapt to the new world of decentralized finance.
And as for the investors in the JPMorgan survey who said bitcoin is a “temporary fad,” a 2020 report by S&P Global shows that 88.4% of actively managed investment funds failed to beat the market over a 15-year period.
The Smart Billionaires Are Buying Bitcoin
Buffett, Munger and Dimon, who are billionaires, have all spoken out against wealth inequality in the U.S.
Yet they’ve insulted and belittled everyday Americans who invested in cryptos to create a better financial future for themselves and their families.
As I pointed out last week, though, some billionaires, such as hedge fund manager Paul Tudor Jones, are warming up to bitcoin.
That trend will continue as more investors wake up to the reality that cryptos are headed toward widespread adoption.
So, it’s a great time to invest in bitcoin, and the recent volatility is a rare opportunity to get in at a lower price.
You can check out Ian King’s Next Wave Crypto Fortunes presentation for some key info on what’s ahead for cryptos.
Regards,
Assistant Managing Editor, Banyan Hill Publishing
