Charlie Munger, Dan Loeb Clash Over "Disgusting" Bitcoin

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by Tyler Durden
Sunday, May 02, 2021 - 02:03 PM

While it's hardly a surprise that Warren Buffett and his trusty, 97-year-old sidekick Charlie Munger, bash bitcoin at every opportunity - after all, there is no greater threat to crony billionaires than a decentralized monetary system that replaces the central bank-created fiat fraud that made them so gloriously wealthy - it was surprising that it took more than three hours into yesterday's Berkshire annual meeting Q&A for the Bitcoin question to finally pop up before the notoriously bitcoin-hating duo, only to be cut off quick: Buffett made it clear immediately that he had no intention of

"I watch these politicians dodge questions all the time,” Buffett says. “I’m going to dodge that question."

“We’ve probably got hundreds of thousands of people watching this that own Bitcoin, and we probably have two people that are short. So we have a choice of making 400,000 people mad at us and unhappy, or making 2 people happy, and that’s just a dumb equation.”

After heaping scorn on bitcoin for years only to see if outperform Berkshire by orders of magnitude, that was a wise decision by Buffett who in 2020 had a year to forget, but one which his ancient partner refused to share and the 97-year-old Munger poked the hornets nest telling Becky Quick that “you’re just waving a red flag at a bull” then telling the world how he really feels (not that it was a surprise to anyone).

"Of course, I hate the Bitcoin success...Nor do I like just shuffling out of extra billions and billions and billions of dollars to somebody who just invented a new financial product out of thin air."

"So, I think I should say modestly that I think the whole damn development is disgusting and contrary to the interests of civilization. And I'll leave the criticism to others."

Well Charlie, have fun staying poor a billionaire as millions of crypto fanatics, many of whom have gotten far richer thanks to crypto, will look to promptly respond to your "non-criticism" even if they may never have access to the kind of broad public forum such as the annual Berkshire meeting.

Yet one billionaire who has as broad a forum and whose investing skills match and in fact surpass those of both Buffett and Munger, and who decided to not let Munger's latest criticism of bitcoin stand was none other than Third Point's Dan Loeb, who on Sunday morning took to twitter to finally put Munger's constant and ridiculous criticism of bitcoin - anyone who shorted bitcoin on Munger's advice is now completely broke - in its rightful garbage place.

Responding to entrepreneur Avichal Garg, who made the convincing argument that we need to finally "stop listening to Buffet and Munger for investing advice. Software changed the game and left them behind"...

Performance since 2008 crash, when Buffet notoriously struck "sweetheart" deals:
* Nasdaq : +848%
* SPY: +444%
* Berkshire: +388%

To which Loab responded that "Munger is a man of great wisdom whose commentary and writings are an indispensable part of the investing canon.  One idea I think is essential to push back on is “invest in what you  know”.  This is a fundamental Mindset flaw and surprised this view is being ascribed to Munger, a life long learner.  Some of our best investments have been in areas I knew nothing about like Sovereign debt trades in Greece and Argentina, structured credit starting in ‘07 (short then long) and privates/VC.  We don’t Ape into these things but do the requisite work to familiarize ourselves with the fundamentals and market structure of these new areas."

His conclusion: "I trust our efforts in digital currencies, blockchain and Defi will pay off" and as for Munger, well..."sometimes the bigger risk is not being involved than staying in your comfort zone on the sidelines"

He is, of course, right, but what is the benefit of spending a life creating a warm crony capitalist cocoon for yourself if you have to exit your comfort zone to make money. Why that kind of "risk" is simply unacceptable in an age when the central bank has outlawed all risk.

But taking a step back, why is Loeb's retort notable, besides the obvious pushback on a flawed, gariatric view about bitcoin?

Because it confirms that while there was no mention of an investment in bitcoin or crypto in the fund's latest investor letter, it now appears that Third Point is not only long one or more digital currencies such as bitcoin and ethereum, but the $17.3 billion firm is also investing in the specialized DeFi space, i.e., names such as ChainLink, Maker and Aave.

It also confirms that Loeb's "deep dive" into crypto which he revealed back on March 1 has resulted with one or more investments...

... and outcome that has yet to be fully publicized, despite a recently overlooked report that Third Point now holds cryptocurrency from five of its funds with Coinbase, according to regulatory documents obtained by CoinDesk. He is hardly alone as fellow hedge fund titan Paul Tudor Jones also recently joined Coinbase as a client, offering a glimpse at the deep-pocketed investors behind the exchange’s institutional assets under management.

Of course, this too should hardly be a surprise: back on April 20, Loeb tweeted the clearest confirmation yet that he too, had joined the ranks of the "diamond hands" (not to be confused with Dimon Hands, which is that unique breed of shitty investor that publishes one bearish bitcoin note after another in hopes of getting clients to dump it so the bank's own prop traders can load up: don't be like Dimon Hands).