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Charlie Munger lashes out at ‘insane’ crypto – again

By Adrian Holliday

08:20, 3 December 2021

Photo of Charlie Munger in dark suit
Charlie Munger worries about market valuations at Australian thought leadership conference – Photo: Shutterstock

Veteran investor Charlie Munger has warned that the cryptocurrency boom is “insane” as he told investors in Australia on Thursday that the current investment environment was “even crazier” than the Dotcom bubble.

Munger, who is vice chairman of the US multinational holding company Berkshire Hathaway (BRK.B) – which Warren Buffett leads – is one of the most successful investors of all time. Both Munger, 97, and Buffett, 91, are established value investors.

Value investing is about buying good quality companies at fair prices, often less than their fundamentals suggest, and holding onto them long-term.

Bitcoin blindspot?

Munger’s comments were made at the annual Sohn conference in Australia, a philanthropic and thought leadership event. A consistently held criticism from both men is that crypto and (some) stock market valuations are out of touch with basic market fundamentals.

BCH/USD

385.45 Price
-1.120% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.50

DOGE/USD

0.13 Price
-0.090% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872

BTC/USD

65,300.40 Price
+0.680% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

ETH/USD

3,488.42 Price
+1.190% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

Despite both men’s seeming adamancy about cryptocurrencies, they could change their minds. Buffett, for example, has revised his opinion over the years after taking an equally vehement stance on other securities, with buying U-turns on gold and airline stocks.

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Cryptocurrency volatility

This morning bitcoin was trading at $56,807.97. There have been some spectacular valuation gyrations in the last seven days, with GXChain rising 514% and Divi up 77%.

Read more: Crypto markets recover late as miner selloff continues

Markets in this article

BRKb
Berkshire Hathaway
439.00 USD
4.46 +1.030%
BRKb
Berkshire Hathaway
439.00 USD
4.46 +1.030%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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