Be fearful when others are greedy and greedy only when others are fearful,” said the legendary investor Warren Buffett in 2004. In other words, buy low and sell high – and don’t follow the herd.
If SoftBank CEO Masayoshi Son had listened to Buffett’s advice, he would have saved $130 million on a bitcoin bet gone wrong. The famous technology investor lost that money by buying bitcoin near the height of the digital currency’s mania and selling after it crashed, according to a report from the Wall Street Journal.Son invested near the peak of bitcoin’s speculative craze, when the cryptocurrency traded as high as $20,000 a coin, according to The Journal, citing people familiar with the matter, though the exact prices that Son bought and sold at are not known. Bitcoin is now trading near $5,500.
While the bitcoin bet was a personal one for Mr. Son, the investment puts a dent in his reputation as a prophetic investor. The Japanese businessman leapt to prominence when his $20 million bet on Alibaba soared to a value of more than $100 billion. On the back of that success, Son raised $100 billion for SoftBank’s Vision Fund, to invest in technology companies.
Even if Son missed Buffett’s general advice on investing, he could have done well to listen to Buffett’s specific warnings on crypto investing.
“Cryptocurrencies will come to bad endings,” Buffett said at Berkshire Hathaway’s annual meeting in 2018. “There’s nothing being produced in the way of value from the asset.”
He continued: “It’s something where people who are of less-than-stellar character see an opportunity to clip people who were trying to get rich because their neighbor’s getting rich buying this stuff neither one of them understands.”
Bitcoin has widely been referred to as a bubble, with some analysts speculating that prices could take decades to recover and may not ever reach previous peaks.