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Posted May 08, 2018

Byron King

By Byron King

Warren Buffett Launches A Blitzkrieg On Bitcoin

Dear Rundown Reader,

Today we show you why Warren Buffett & Co. have cryptos pegged all wrong.

But first, feedback from yesterdays issue on Elon Musk and Nikola Tesla.

Like Tesla, Musk should get all the support we can give him as he will change life for the better.

We couldnt agree more. Hopefully, folks with deep pockets think so too.

I want to thank you for your evaluation of Elon Musk. I think it was spot on! Before judging an individual, walk a mile in his shoes. Thank you for the stroll.

Its easy to jump on the bandwagon. But you read us for a unique take on things. Were happy to oblige.

(Musk) must stick to what he does best being the visionary and innovator and let someone else more qualified and capable for the position be the CEO and run the businesses he founds.

Great point. Ray Blanco noted yesterday, Elon Musk needs a John Scully type on his side.

Your Rundown for Tuesday, May 8, 2018

Buffett & Co. Are Dead Wrong On Bitcoin

Warren Buffett, Bill Gates and Charlie Munger launched an all-out assault on bitcoin Monday.

The panel of financial giants took to CNBCs Squawk Box to rail against cryptos, bitcoin specifically.

Munger claims, bitcoins are artificial gold, and the fact that it's clever computer science doesnt mean people should buy in.

Microsoft co-founder Bill Gates noted, bitcoin and other cryptocurrencies are a greater fool theory type investment.

Gates doubled down on this stating, if there was an easy way to short bitcoin he would.

Buffett rounds out the blitzkrieg, stating the king crypto is "probably rat poison squared.

Clearly, no punches were pulled Monday.

Saturday, bitcoin was flirting with the $10,000 mark.

But after a slight correction Sunday, bitcoin dropped over 5% from its high Monday of $9,628 to where it sits this morning at $9,105. Heres the chart for the past few days.

Buffet Effect

When Buffett, Munger, and Gates speak, people listen. Including millennial coin holders.

But that doesn't mean they are right about bitcoin, or crypto in general. Heres why.

Cryptos do have value.

Buffett & Co. claim that bitcoin, unlike gold and other asset classes, has no value. But what gives value to an asset in the first place?

Gold, the prototypical comparison asset to crypto, is also valueless. Unless you can trade it for other things.

Lucky for gold, people like shiny things.

But the fact still remains, until you trade gold for something else its valueless.

Buffett, Gates and Munger all seem to miss this fundamental point.

Try buying your groceries with gold coins next week. Good luck.

You still need cash. Because cash is useful. And true value lies in utility.

You can trade cryptos for cash money. Thats a cold hard fact.

Therefore, it has value. Its really that simple.

The real problem with cryptos still is that they don't have scale.

But when that changes Buffett & Co. are going to be sore they missed out.

Now, turning to the markets this morning...

Market Rundown for Tues., May 8

S&P 500 futures are down 7.25 to 2,662.

Oils down $0.72 to $70.01.

Golds down $3.90 to $1,310.

Bitcoin trades for $9,105 this morning, according to CoinDesk.

Well talk again tomorrow.

For the Rundown,

Aaron Gentzler

Aaron Gentzler

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