Can one invest in crypto? The answer is no, but it feels like there are only a handful of us who believe that: Warren Buffett, Charlie Munger, Aswath Damodaran, New Finance Institute (us) and my son.
Even more concerning than being a minority? A minority whose voice is fading away. Charlie Munger has left the chat. Buffett famously called Bitcoin rat poison squared, and did his best to convince people that one cannot invest in Bitcoin, but then he concluded that is just a dumb equation. He momentarily came back after that towel throw and stated that he wouldn’t pay $25 for all the Bitcoin in the world, but we don’t really hear much from him anymore in that regard.
Aswath Damodaran tried to bring some order to the chaos, but he has surprisingly stopped talking about it, too. Perhaps, he also concluded this is a dumb equation.
Let’s see, who else will tell my daughter and her generation that one cannot invest in crypto? Because somebody needs to tell them the truth, no?
You have questions, but answers don’t come easy. Let us set a scene for you. Think of the world of finance as a night out on the town and think of financial opinions as nightclubs. It’s nighttime and you’ve decided to check out this new club. Well, the club itself is not new, it has been around for many years. However, it has been under new management. The grand opening was Halloween night in 2008. Before that, the club used to be called Moneymakers. New management changed the name to Investments and it’s been hopping ever since.
Upon arriving, you discover a very long line at the door. Once you enter the club, Michael Saylor greets you and tells you the energy in the club is great. You spot Ric Edelman and Niall Ferguson at a booth where they discussed the ever-popular topic of, what else, Bitcoin. Wharton reserved its own table, and they are seen constantly asking other people to join. A State of Wisconsin Investment Board representative is busy chatting with someone from Abu Dhabi’s Sovereign Wealth Fund.
You keep walking around trying to get a feel for the place. In the back there is a group of people that don’t exactly seem to be happy to be here. They complain how loud the place is. Yet, apparently they couldn’t bring themselves to leave, either. The club is just too entertaining. It’s a place to see and be seen. “Even if you’re not happy inside, I guess it must still feel better than being outside,” you murmur to yourself.
You walk by a big table that seems to be occupied by the SEC. “An interesting choice,” you observe, “for a group who is trying to protect investors. They should have gone to this other place.” Gary Gensler had just left the table, but it doesn’t appear like he left the club, he probably found somebody else to sit with. You notice Elizabeth Warren, Christine Lagarde, and Bill Gates sitting across the room, passionately debating something.
After walking around the club some more, you notice this other table with a sign that says speculative investing. You recognize some of the people from Charles Schwab, the Wall Street Journal and the New York Times. Somebody at the table is speaking with a British accent, which piques your interest. You look at the name tag, it says Financial Conduct Authority.
Lambos are parked in front. The club is hopping, drinks are flowing and money is in no shortage. There is an undeniable aura in the club. Michael Saylor’s strategy seems to be working.
You remember this other club that used to be the go-to place in its heyday. That club has also been around for a long time, and found it a little difficult to get going in the 1920s. Then a gentleman named Ben Graham took over the business, and made it the best place in town. When he passed away, Warren Buffett took over. It slowed down a little bit but was still humming before these guys showed up. It’s still in business, but it’s a shadow of its former self.
“Good times.” Your eyes get a bit watery, full of longing. You consider leaving, but just before you could get up, you spot a little crowd forming at the door. Somebody new just entered the club. You look up to see who the latest guest is.
Much to your chagrin, the great Matt Levine walks in…