Charlie Munger and Warren Buffet Are Out of Their Element

Investing Legends

Warren Buffet (on the right) is probably one of the best known investors alive today. "The Oracle of Omaha" has made more money is his life time than any of us will probably see and that dwarfs the Gross National Product of most nations! He and his lieutenants, such as Charlie Munger (on the left) have made Berkshire Hathaway one of the most successful, if not the most successful investing firm in the world. I have nothing but the utmost respect for both of these pillars of their profession, but when it comes to crypto, they don't know anything more than we do.

"I invest in what I can understand."

Warren Buffet has made his money from mastering fundamental analysis. This means pouring over the books of a given company, looking at the performance history and taking production expansion and field innovation into account when projecting potential numbers for the future. Doing exhaustive fundamental research on companies have made them a lot of money. They also use, but to a much smaller degree, technical analysis. This has to do with identifying trends and patterns in the price action charts of a given company. This is considered more of an art than a science because there is much interpretation by the observer and isn't based necessarily on cold hard facts like fundamental analysis. Fundamental analysis works best with companies that have a tangible product, be it a widget or a gadget or a service. This is what they understand; the traditional forms of analysis on traditional companies making traditional things. They have spent a lifetime honing their craft in this field and they have proven that they are good at it, however crypto is a completely different animal. These gentlemen deal in a very safe area of the stock market when compared to the wildly swinging volatility of the crypto market. They have a hard time understanding how the crypto market operates and Warren Buffet himself has said that he doesn't invest in things he doesn't understand. They are an authority when it comes to the stock market, but when it comes to crypto, they are out of their element.

Take it with a grain of salt

As I said at the beginning, I have nothing but the utmost respect for these gentlemen, but to put it frankly, they don't know or understand the crypto market so their opinions don't hold as much water. When it comes to traditional markets, I follow and mirror Warren Buffets moves to some extent, but when it comes to crypto, his opinions are out of touch. Think of it this way; when your car needs to have the transmission rebuilt you take it to a mechanic. When your car needs a new windshield you take it to the glass replacement shop. They both work on cars, but specialized in different aspects. I wouldn't ask the glass replacement guy to rebuild my transmission and I wouldn't ask the mechanic to replace the glass. Could either one do the other's job, maybe, but wouldn't be as proficient. And that is my point; not all investing is the same; different types have their own nuances and just because you are successful in one does not mean that will be successful in another or understand how the other works. Mr. Munger and Mr. Buffet are out of their element and therefore their opinions should be taken with a grain of salt.

Check out my other crypto posts:

Here We Go Litecoin!
Big Gains for Ripple on the Horizon
If You Can't Fight 'em, Join 'em: Salon Offers Ads or Bitcoin Mining
XRP (Ripple): The Gateway Crypto

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