Bad Move Buffett as Berkshire Hathaway CEO Lost Over $200 Million on Amazon vs Bitcoin Investment
Back in the middle of May, The CEO of Berkshire Hathaway, Waffen Buffett made the news headlines in a big way thanks to his rather lavish spending in the pool of Amazon Equities. As of May 15th, Berkshire Hathaway officially added an extensive amount of Amazon stock to its portfolio for the very first time.
Just how big of acquisition was this? According to news reports, Berkshire has executed a staggering acquisition of 904 million dollars for the international retail giant shares. Over the last few months, this specific investment had managed to perform quite well over the next two months.
While this is something to take on in solace, Amazon has not managed to do anywhere near as well as the price of Bitcoin over the same span of time. So how much does this all equate to? We'll be taking a look at just how much the ‘Oracle of Omaha' managed to lose out on by buying into Amazon instead of buying into Bitcoin.
A Stake in the Amazon – What Buffett Lost out on
During the same day that Berkshire Hathaway successfully completed this acquisition, Amazon Stock effectively traded for $1,871 by market close on the same day. According to market reports two hours before the close of business on Thursday, these same shares managed to trade at a price of $1957, demonstrating a rally from the days previous losses from the day when the market slipped from $1,980 per share during the beginning of trading that day.
According to news reports from the same day, the record number of sales during the Prime Day sale helped send Amazon stock higher.
CCN Markets – @CCNMarkets,
“Prime Day Blowout sees Bullish Amazon Stock Aiming to Deliver All-Time High: Amazon Prime Day may be over with technical and fundamental factors aligning, investors should consider the company's stock.”
All in all, that is not at all a bad kind of return for Warren Buffett making this investment over just two months, and is a particular impressive Return on Investment. Since May 15th, for example, Berkshire's stake in Amazon ultimately grew from an initial value of $904 million to $945 million in the space of mere months.
Overall, this makes for a 4.6 percent return on investment and more than $41.55 million worth of profit for shareholders in Berkshire Hathaway.
There's certainly no arguing that it was a great move by Buffett, but what would have happened if he suddenly decided to pour this investment capital into Bitcoin on May 15th instead of going into Amazon? A whole lot more than from Amazon.
Bitcoin's Price Skyrockets, Outmatching Amazon by 600 Percent
During the same time as Buffett decided to invest in Amazon, the price of Bitcoin officially peaked afte what amounted to a two week long bullish run, sending its value peaking at more than $8,250. From here, it then traced what we refer to as an ascending wedge pattern, allowing it to edge just past the $8,800 mark by the beginning of June.
This was all before pulling back to the low $7,500 range in Mid-June, all before successfully launching beyond the $13,000 level before the end of the same month. Moving forward, by July, the price of Bitcoin had managed to endure a pretty turbulant ride between its lower support of $9,500 and its upper resistance point of $12,000.
As Amazon stock managed to reach a peak in trading at $1,957 on the NASDAQ as of 2pm EDT on Thursday this week, Bitcoin was also trading at the same time on the cryptocurrency exchange – Coinbase – for a total of $10,540 USD. Directly comparing this with Amazon's return on investment for Berkshire Hathaway, Bitcoin would have provided a 27.75 percent ROI if the company would have held BTC since mid-may, in stark contrast with Amazon's 4.59 percent return.
Ultimately, what this would have meant is 604 percent more Return on Investment for the ‘Hodlers.'
CCN – @CCNMarkets,
“Newsflash – Bitcoin Price Skyrockets to $10,000 to Reverse its Brutal Plunge: The bitcoin price skyrocketed back across the $10,000 threshold on Thursday, reversing much of the cryptocurrency's recent plunge.”
If, hypothetically, Warren Buffett had decided to go for an investment strategy much more akin to the likes of entrepreneurs like Tim Draper or the Winklevoss Twins, and acquired more than $904 million worth of Bitcoin on May 15th, he would have effectively been holding an investment worth $1.15 billion as opposed to $945 million.
So, rather than walking away with $41.55 million over the last two months, Berkshire Hathaway could have effectively made off with more than $250.93 million.
As a result of Buffett's choice, in choosing to invest in Amazon, the CEO of Berkshire Hathaway had managed to leave more than $209 million on the investment table. There's no discrediting the kind of sage advice and wisdom that Buffett can provide in the world of investment.
They don't call him the ‘Oracle of Omaha' for no reason. But, by taking the more dismissive stance of calling Bitcoin a ‘Delusion' he has effectively dismissed more than 200 million dollars worth of ROI.