Munger wants U.S. crypto ban, calling it unfair 'gambling contract' 

Charlie Munger is calling on the U.S. to ban cryptocurrencies.

In an opinion piece in The Wall Street Journal on Thursday (Fox Business has a non-paywall version), Munger wrote that the lack of regulation has allowed "wretched excess," with thousands of new cryptocurrencies traded without disclosures about how much promoters profit from the initial sales.

"A cryptocurrency is not a currency, not a commodity, and not a security. Instead, it’s a gambling contract with a nearly 100% edge for the house, entered into in a country where gambling contracts are traditionally regulated only by states that compete in laxity."

He cites two precedents: China's 2021 crypto ban and England's prohibition of "all public trading in new public stocks" in the wake of the South Sea Bubble in the early 1700s.

Munger writes that in the 100 years the ban remained in place, "England made by far the biggest national contribution to the march of civilization as it led strongly in both the Enlightenment and the Industrial Revolution and, to boot, spawned off a promising little country called the United States."

If the U.S. does ban crypto, Munger thinks it would make to sense to thank Chinese leader Xi Jinping for "his splendid example of uncommon sense."

This is not, of course, the first time Munger, or Warren Buffett, have expressed their disdain for crypto as an investment. (There is an entire page on our Warren Buffett Archive devoted to what they've said over the years.)

And in a November interview with CNBC's Becky Quick following the collapse of FTX, Munger said the country does not need "a currency that was good for kidnappers."

Berkshire trails S&P in the new year

With small year-to-date losses, both classes of Berkshire Hathaway shares are underperforming the S&P's gain of almost 8%.

That's a reversal from last year, when Berkshire's Class A shares gained 4.0% and the benchmark S&P fell 18.1%, with dividends.

Barron's notes that speculative stocks are back in favor so far in 2023, so investors are less interested in Berkshire, "the ultimate defensive blue-chip stock."

But it says Berkshire's stock has "gotten more appealing" due to some big gains for some of its big portfolio holdings, especially Apple.

The iPhone maker is up almost 20% this year, adding $25 billion to the value of Berkshire's stake, which makes up around 40% of its equity portfolio.  

Berkshire continues steady sales of BYD shares

Berkshire Hathaway disclosed this week that it sold another 11.7 million shares of the Chinese electric car maker BYD since early this month.

As of January 27, it held 141.6 million shares, which is 12.9% of BYD's outstanding shares. At today's close, they are worth $4.6 billion.

BYD shares are up around 32% on the year, so despite having fewer shares, Berkshire's stake is worth $100 million than it was on January 13 when we reported on the previous sales disclosure.

If Berkshire had held on to all 225 million shares, they would be currently be worth $7.3 billion.

This most recent reduction brings the total sales to 83.4 million shares since the first batch was disclosed late this summer, reducing the 225 million shares stake Berkshire bought in 2008 for $230 million by a bit more than 37%.

Carnegie vs. Buffett

In last week's newsletter, I quoted Forbes as saying that since Buffett pledged in 2006 to give away almost all his fortune, he has donated $51.5 billion, making him "likely the biggest philanthropist of all time."

Subscriber Bill Rubin emailed to take issue with that superlative, noting that in inflation-adjusted dollars, Andrew Carnegie "gave away more and had much more impact than Warren Buffett."

He did indeed have more to give. The Carnegie Corporation cites an estimate that would put his peak wealth at around $400 billion in today's dollars.

Forbes estimates Buffett's current net worth is $107 billion.

Rubin writes, "Carnegie's establishment of libraries, colleges, schools, nonprofit organizations & associations as well as several trusts or institutions bearing his name is unrivaled and nobody is even close."

BERKSHIRE STOCK WATCH

BERKSHIRE'S TOP U.S. STOCK HOLDINGS - Feb. 3, 2023

Berkshire's top holdings of disclosed publicly-traded U.S. stocks, and BYD, by market value, based on today's closing prices.

Holdings are as of September 30, 2022 as reported in Berkshire Hathaway’s 13F filing on November 14, 2022, except for:

• Apple, Bank of America, Chevron, and U.S. Bancorp, which also include shares held as of September 30, 2022 as disclosed in New England Asset Management’s 13F filing on November 14, 2022
• BYD, which is as of January 27, 2023

The full list of holdings and current market values is available from CNBC.com's Berkshire Hathaway Portfolio Tracker.

QUESTIONS OR COMMENTS

Please send any questions or comments about the newsletter to me at alex.crippen@nbcuni.com. (Sorry, but we don't forward questions or comments to Buffett himself.)

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-- Alex Crippen, Editor, Warren Buffett Watch