The data indicate that Warren Buffett was incorrect about a Bitcoin portfolio containing ‘rat poison’
This stance damaged Warren Buffett’s investment portfolio by at least 3200% in potential returns.
The legendary investor Warren Buffett has infamously referred to Bitcoin as “rat poison squared.” According to independent market analyst Alpha Zeta, allocating only 2.5% of Bitcoin annually to the rat poison portfolio has increased returns by nearly 20% while reducing risk since 2014. Currently, the portfolio’s returns are approximately 16%.
Alpha Zeta pointed out that while Bitcoin’s price is notoriously volatile, it has a poor connection with equities such as Berkshire Hathaway, Microsoft, JP Morgan, and BlackRock.
For instance, during the bear market of 2021–2023, Bitcoin allocation to the rat poison portfolio could have mitigated losses by approximately 10%.
In other words, Bitcoin typically offsets losses caused by downward stock price movements. Consequently, allocating a small amount of Bitcoin to the rat poison portfolio has proven to be a prudent method of mitigating the possibility of negative returns.
Proponents of Bitcoin have projected it as an alternative to conventional safe-haven assets, such as gold, due to its fixed supply of 21 million BTC and deflation that increases over time.
This has encouraged many individuals to purchase Bitcoin as a hedge against fiat debasement and excessive money creation by central banks worldwide. Buffett has recently stated that Bitcoin is a token for wagering, observing that “it has no intrinsic value […] but that doesn’t stop people from wanting to play roulette.”
The veteran investor’s prominent investments, such as Nubank, which provides crypto-related services in Latin America, however, continue to expose him to the broader crypto market.
As of April 2023, Bitcoin is down roughly 60 percent from its record high of $69,000 in November 2021, but it is up 100 percent so far this year.
Bitcoin has outperformed Berkshire Hathaway’s portfolio by more than 3200% since its inception in January 2009.
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