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Berkshire Hathaway Inc.’s Charlie Munger told a conference Friday that markets are wildly overvalued in places and that the current environment is “even crazier” than the dotcom boom of the late 1990s that subsequently led to a bust.

“I consider this era an even crazier era than the dotcom era,” Munger, 97, said at the Sohn conference in Sydney

Munger also said that he wished cryptocurrencies didn’t exist, and praised China for taking action to ban their use, according to the AFR.

“I wish they’d never been invented,” he said. “And again I admire the Chinese, I think they made the correct decision, which was to simply ban them. In my country, English-speaking civilization has made the wrong decision, I just can’t stand participating in these insane booms, one way or another.”

https://www.bloomberg.com/news/articles ... otcom-bust

I completely agree with everything he said.

I'm not long any crypto, but I think Charlie goes a tad bit too far regarding cryptos. I can imagine a world where crypto creates value, but this just feels more like the .com boom rather than a real solution set. As for the market in general, I agree with Charlie, but there can still be bargains to be found and certainly some folks are already bag holders-- I'm looking at you zoom and peloton. I think Charlie's best general advice is to know where you will die and not go there. Much of the overpriced speculation in the market are clearly places you can die, so I avoid them.

markets are wildly overvalued in places

Looking at you Tesla!

“I wish they’d never been invented,”

He can wish what he wants, but does that mean they're going up or down, relative to USD?

I think he's right that crypto is a terrible place for "investment," but the use case for decentralized digital cash is certainly there. It just won't work when the coins are rapidly changing value and are slow and expensive to transact.

"Crypto is by nature limited in supply." Except it isn't. New cryptos are being created all the time. Some of them, most of them probably, will get Myspaced and I'm not going to try to figure out which one will be Facebook.

unemployable wrote: ↑

Sat Dec 04, 2021 1:04 pm

"Crypto is by nature limited in supply." Except it isn't. New cryptos are being created all the time. Some of them, most of them probably, will get Myspaced and I'm not going to try to figure out which one will be Facebook.

Someone should make a set of Tom NFTs. It'll probably sell for thousands, ironically. Free idea.

What happens if/when they all get banned ?

chenda wrote: ↑

Sat Dec 04, 2021 1:27 pm

What happens if/when they all get banned ?

They won't, not by civilized countries at least. They will, however, get regulated and taxed when their revenue and taxation potential starts to outcompete existing economic schemes. See: online merchants and sales tax, uber, airbnb...

Didn’t Berkshire Hathaway avoid tech investments for most of the last two decades because Munger & Buffett didn’t feel they knew the tech space well enough? Not to say tech/crypto aren’t in a bubble, but I would venture to guess Munger is somewhat overly pessimistic/conservative about the space.

Salathor wrote: ↑

Sat Dec 04, 2021 11:42 am

I think he's right that crypto is a terrible place for "investment," but the use case for decentralized digital cash is certainly there. It just won't work when the coins are rapidly changing value and are slow and expensive to transact.

I always ask bitcoin advocates what is bitcoin worth and when was the last time you used it for a purchase, I haven't had any answers yet. Also like you said nobody wants to spend them as they don't want to end up like that guy that purchased a pizza with bitcoin years ago that would now be worth 100k+

unemployable wrote: ↑

Sat Dec 04, 2021 1:41 pm

They won't, not by civilized countries at least. They will, however, get regulated and taxed when their revenue and taxation potential starts to outcompete existing economic schemes. See: online merchants and sales tax, uber, airbnb...

Yes I think you're right. It seems much tighter regulation is starting to be applied in many countries.

You can use it in salvador to buy anything trough lightning. It works faster than credit card, with much less fees. At the moment outside salvador, it's just an adoption issue, but as a money, it's clearly superior to every other money, and the only way fiat have a chance of maintaining their supremacy will be trough force. The only question to ask is if entities that benefit from the supremacy of fiat currencies have the mean to stop adoption of bitcoin.

Jean wrote: ↑

Sat Dec 04, 2021 5:22 pm

it's clearly superior to every other money

I would say it's superior in MANY ways to several types of money, but not STRICTLY better than ALL types of money. Gold is inviolable and eternal, can be crafted in new shapes, and works in the absence of both electricity and internet connection, all strengths that bitcoin lacks.

It’s funny to declare Bitcoin as a superior money few hours after it lost 18% in 12 hours.

Imagine how practical it would be to grocery shop with that kind of volatility

@seppia, but there is no brrrrrrr so at least no inflation from printing

This seems to be turning into a btc thread, but I am more fascinated by the fact that Munger is at age 97 still so up to date, passion full about this all etc. Again, 97 years old.

bostonimproper wrote: ↑

Sat Dec 04, 2021 4:07 pm

Didn’t Berkshire Hathaway avoid tech investments for most of the last two decades because Munger & Buffett didn’t feel they knew the tech space well enough?

Munger said "they don't undestand technology but he understands advertising. They were using google for advertising their insurance business and still missed out."

Didn't they make a big investment in Apple.

rube wrote: ↑

Sun Dec 05, 2021 3:58 am

I am more fascinated by the fact that Munger is at age 97 still so up to date, passion full about this all etc.

I think people who are such outliers either have to be 100% genuinely passionate about what they do or they get so defined by their character that they just cannot stop.
I’m thinking if Munger had stopped working at age 89 he would have been dead by age 90.
This is what fuels him

There is already another BTC thread if you want to argue about the utility of cryptocurrency: viewtopic.php?t=7848

In terms of the dotcom boom comparison, I think there's a lot of truth in that. However, as I understand it the dotcom boom was not exacerbated by fiscal and monetary policy, which play a large role in the dynamic today. Further, you didn't have the level of debt (to include gov't) and leverage across the entire system that we have today. The Fed raised the federal funds rate to ~6% in order to prick the dotcom bubble. The current fed funds rate is 25 basis points.

Additionally, you didn't have the TINA dynamic for everyone from retail to institutional and enormous monthly "dumb money" inflows into indexes like you do now, which tend to increase volatility due to little price sensitivity.

So it's not so much of a question of whether this is a bubble, more so the questions are:

1. Can/will the Fed attempt to accelerate tapering and reduce rates? Powell talked big game about accelerating tapering recently (perhaps in an attempt to slow markets without having to actually risk causing a recession), but the Fed is still backstopping a variety of credit markets to include mortgage-back securities. Right now the political trade off is reduce inflation or slow the economy.

2. Will fiscal policy play a large role in the next few years like it did at the beginning of the pandemic? Political gridlock seems like the default recently, but things are difficult to predict especially as we move into midterms in 2022. The government could easily blast out another round of stimulus in the next economic "crisis" whether that be COVID-related, energy-related, etc. I'm trying to avoid political discussions about what gov't should do and just frame some of the possibilities.

3. How long can the current system continue? This is the hardest to predict and the answer is probably "until it can't." We can go back over the past 5+ years and see all sorts of comments about how sentiment is ridiculously high and assets are overvalued, yet the party continued on.