Warren Buffett, arguably the most successful investor of all time, does not invest in cryptocurrency.
The man is famous for investing in companies that he understands. And since he's almost 90 years old, he's probably not very tech savvy.
He's probably like my dad and still doesn't know how to text.
That said, the man is famous for making big bucks - ESPECIALLY in a down market.
For example, after the 2008 housing crash which lead several bailouts, Buffett made a ton of money by investing in banks.
Normal people, i.e. you and me, probably would have looked at that situation and thought to ourselves, "Why would he invest in banks NOW? They're doing terribly!"
But Buffett is a smart guy. He knows that the banks aren't going anywhere. These massive financial institutions, pillars of entire societies around the world, aren't simply going to disappear because of a correction in the stock market.
People need banks. Without banks, there is no modern civilization as we know it. Buffett knows this.
So what did he do? He dropped a bunch of money into banks.
Did he lose money? No, he made boatloads.
So what would Warren Buffett do if he was looking at the cryptocurrency markets today?
To find the answer to this question, let's examine one of Buffett's famous letters to his stockholders. This one is from 1977:
We select our marketable equity securities in much the same way we would evaluate a business for acquisition in its entirety. We want the business to be:
- One that we can understand,
- With favorable long-term prospects,
- Operated by honest and competent people, and
- Available at a very attractive price.
We ordinarily make no attempt to buy equities for anticipated favorable stock price behavior in the short term. In fact, if their business experience continues to satisfy us, we welcome lower market prices of stocks we own as an opportunity to acquire even more of a good thing at a better price.
After reading this, you may realize that you have been caught up in the FOMO of investing in the latest hot product in the cryptosphere. It happens to all of us. Except Buffett, apparently.
The last paragraph and #4 are quite interesting. Buffett doesn't mind buying stocks at a lower price, because he feels that he's essentially getting a better deal on a good thing.
Logically we know this to be true. But emotionally we react differently, especially when some of our own money is at stake.
So remember, if you have extra money to play with, a downturn in the market is the time to do it. Just remember to do your research, stay logical, and pick your coins like Buffett would.
