To The Moon

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Few figures in the investment world have wielded as sharp a tongue—or as sharp a mind—as the late Charlie Munger, longtime vice chairman of Berkshire Hathaway and Warren Buffett’s closest business partner. Famous for his pithy one-liners and his unvarnished skepticism of financial fads, Munger reserved some of his harshest language for cryptocurrencies.

In February 2023, during a Daily Journal annual meeting, Munger went further than ever before:

“It’s like somebody else is trading turds and you decide you can’t be left out. I think it’s crazy, stupid gambling. And it’s disgusting. It’s like a venereal disease.”

That analogy—likening crypto to a venereal disease—generated headlines and considerable pushback from crypto enthusiasts. But what exactly did Munger mean? And what should investors take away from his scathing indictment of digital assets?

Why Munger Hated Crypto So Vehemently

Charlie Munger’s critique of cryptocurrency wasn’t born of ignorance—he understood the mechanics of blockchain technology and the psychology behind speculative manias. But for him, the rise of Bitcoin and its thousands of imitators embodied nearly everything he despised in markets:

• Non-productive assets: Like Buffett, Munger believed good investments should produce goods, services, cash flows, or dividends. Crypto produces nothing; it depends entirely on someone else paying more later.

• Speculative mania: Munger viewed crypto as a textbook example of the greater fool theory, where buyers knowingly purchase overpriced assets hoping a “greater fool” will pay even more.

• Moral hazard: Munger believed cryptocurrencies facilitated illicit activity, tax evasion, and financial scams. He often said the industry was “under-regulated” and full of promoters preying on naïve investors.

• Social harm: Beyond financial losses, Munger believed the speculative frenzy damaged societal morals by normalizing gambling-like behavior and undermining confidence in sound money.

Calling it a venereal disease was his way of warning that crypto wasn’t just harmful to individuals—it was contagious, destructive to the financial system, and hard to eradicate once it spread.

Why the “Venereal Disease” Metaphor?

Charlie Munger’s metaphors were never accidental. Comparing cryptocurrency to a sexually transmitted disease underscored several points:

1. It spreads quickly. Speculative manias tend to spread like contagion, infecting not just individual investors but institutions and even nations. Munger saw crypto adoption as more viral than rational.

2. It’s harmful to participants. Like a disease, participation often leaves people worse off—financially and psychologically. Many who entered during bull markets exited with catastrophic losses.

3. It’s hard to eradicate. Once entrenched, speculative ideas can persist for years, despite evidence of their harm. Crypto, in his view, was unlikely to disappear soon because of the social and psychological forces sustaining it.

4. It reflects poor decision-making. Just as venereal disease is often the result of poor judgment and risky behavior, investing in crypto was, to Munger, an avoidable but tempting mistake.

By invoking such a stark image, Munger hoped to shock investors into thinking twice about chasing speculative trends that had no economic substance.

The Broader Lesson: Skepticism and Discipline

Munger’s harsh words reflect a broader principle that served him well for over 70 years: be skeptical of fads, and demand evidence of real, lasting value.

He often reminded audiences that financial markets are full of charlatans, promoters, and dreamers peddling schemes that sound good but collapse under scrutiny. In Munger’s world, crypto was simply the latest in a long line of speculative bubbles, no different in nature from the South Sea Bubble, dot-com mania, or subprime mortgage-backed securities.

Munger also believed that speculation harms not just individuals but capital markets more broadly, misallocating resources away from productive uses. He once remarked:

“It’s bad for the civilization. And it’s bad for the people who do it. It’s bad, bad, bad.”

Why His Critique Still Matters

Even after Munger’s passing, the crypto market continues to thrive. Bitcoin trades near all-time highs, institutional investors have jumped in via ETFs, and some even argue that crypto is finally maturing. Does this mean Munger was wrong?

Not necessarily. His point was not that speculation can’t generate profits—indeed, he acknowledged people could make money gambling. His warning was that chasing fads is not investing, and it often ends badly for the majority of participants.

His critique also highlighted a key distinction: ✅ Investing creates value and wealth over the long term. 🚫 Speculating depends on price movements and sentiment, which can reverse without warning.

Takeaways for Investors

Even if you disagree with Munger’s characterization of crypto, his underlying lessons are worth remembering:

🔹 Understand what you own. Before investing, ask: what does this asset produce? How is its value determined? Does it have a durable competitive advantage?

🔹 Beware of hype. When everyone around you seems to be getting rich on something you don’t understand, resist the urge to join the herd.

🔹 Stay within your circle of competence. Munger and Buffett famously avoided technology stocks for years—not because tech was bad, but because they didn’t fully understand the dynamics. The same logic applies to crypto.

🔹 Consider the social and moral dimensions. Munger believed that how you make money matters. Speculating on an asset that facilitates scams or damages trust in money has consequences beyond your portfolio.

Final Word: Prudence Over Fashion

Charlie Munger’s vivid critique of crypto may strike some as hyperbolic. But history suggests that markets are prone to speculative excesses that harm investors and society alike. His “venereal disease” metaphor was less about crypto itself and more about the dangerous mindset it can foster: chasing quick riches without regard for value, risk, or ethics.

For serious investors, the lesson is clear: don’t confuse speculation with investment. Focus on assets that generate lasting value, stay skeptical of fads, and remember that the best opportunities are often the least fashionable.

As Munger himself might have put it:

“It’s remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

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