The cash trend and the decline of cryptocurrencies: Warren Buffett’s forecasts for 2023
Warren Buffett is one of the most successful investors in the world. He not only understands the trends of the modern stock market better than others, but in many ways he forms them himself.
We tell you what the billionaire thinks about cryptocurrencies, what investments he should pay attention to in 2022, and what forecasts Buffett makes for 2023.
Cryptocurrencies are on the decline
Warren Buffett has long been skeptical about cryptocurrencies: for example, in 2014 he argued that bitcoin “does not meet the criteria of a currency” and could disappear in 10-20 years, and in 2018 he called cryptocurrencies “rat poison squared”.
In the same 2018, Buffett said that in the five-year perspective he would be happy to invest in any of the major cryptocurrencies if he were not sure that it would all “end badly.” Within a year after that, bitcoin really fell in price – from $14 thousand to $3.8 thousand. But already in 2021, this cryptocurrency skyrocketed again – up to $60 thousand. In 2023, the five-year period mentioned by Buffett ends. At the time of publication of the material, the BTC rate is $ 17 thousand – there was another drop by almost 75%.
In 2022, problems began even for the largest players in the cryptocurrency market. One of the most famous crypto exchanges, FTX, filed for bankruptcy on November 11. The rapid collapse of FTX has shocked the market – holders of the FTT token will most likely not be able to return the money invested, and experts are warning of a panic among investors and a “flight from cryptocurrencies” into cash and gold.
All of this could mean that Warren Buffett’s predictions are coming true after all. At the same time, the investor himself repeatedly repeats that he cannot predict the future and the economy – at the annual meeting of his company Berkshire Hathaway in 2022, Buffett once again emphasized this.
Cash is still trending
At the same Berkshire Hathaway meeting on May 4, 2022, Buffett revealed that he continues to believe in cash. Cash includes, for example, Treasury bills – securities of the US Treasury.
Buffett is sure that reducing the size of his cash and securities reserves in times of high inflation is not always productive, it can harm financial independence. This applies to both personal and corporate finance: in case of unforeseen circumstances, cash can eliminate the need to borrow money from a bank or from relatives. For investors, holding cash is a way to hedge their fast-growing assets against unexpected liquidation.
Oil prices will rise
In 2022, Warren Buffett spent $14.5 billion on the shares of the American oil company Occidental Petroleum and increased his stake in it to 50%.
Recall that in 2020, due to the pandemic, oil prices dropped to a record level since 1991 per day: for example, Brent quotes fell to $31.27 per barrel, and Russian Urals fell to $10.5. By the end of 2020, the fall in prices ended, and in 2022, oil prices peaked at $130 per barrel. Occidental Petroleum has rebounded from the crisis and its share price has risen from $10 to $60. It can be assumed that Buffett’s investments in the oil and gas company indicate that he does not agree with the negative scenarios for this sector.
At the same time, Buffett continues to invest in green companies, including Occidental Petroleum. The company is developing advanced carbon capture technologies to create new carbon-based products and reduce CO2 emissions from its oil and gas operations. With this, OP believes he will be able to generate as much profit from carbon dioxide as he does from oil and gas. Buffett is investing in the long term, betting that there will be room for oil companies in the future if they minimize their carbon footprint.
Self-development will protect against inflation
Warren Buffett is sure that the most effective remedy for inflation is self-development and education. Professional skills, unlike any currency, do not depreciate. The Visionary believes that if a person has a skill that is in high demand, that person’s work will be in demand regardless of the exchange rate.
“The best investment today is self-development. And again, it’s not taxed,” Buffett said at Berkshire Hathaway’s annual shareholder meeting. The Visionary advises to choose what you love and immerse yourself in what you really like to do and what will be useful for society.