Warren Buffett Hates Bitcoin and Gold But Loves Deep Value: Here’s Where to Look

Warren Buffett isn’t tempted by Bitcoin and gold. He would much rather get paid to wait from dividend stocks like Suncor Energy (TSX:SU)(NYSE:SU).

| More on:
Man holding magnifying glass over a document

Image source: Getty Images.

Bitcoin has been picking up traction, probably at the expense of gold. Many smart people are changing their tune with speculative cryptocurrencies. Some men have tried, with no success, to lure Warren Buffett into the crypto world. And while the wildly volatile asset may need more time to prove itself as a store of wealth, I do not see the man changing his tune on crypto or any other non-productive asset, for that matter.

Warren Buffett: Still no fan of Bitcoin or gold!

Warren Buffett’s distaste for Bitcoin shouldn’t be a surprise. Not only does he struggle to grasp why anyone in their right mind would want to own it, given its volatile nature, but the man isn’t a fan of non-productive assets, period. It doesn’t matter if we’re talking about Bitcoin, gold, or any other asset that doesn’t have an intrinsic value.

You see, Warren Buffett likes getting paid to wait. When asked about either Bitcoin or gold, you can count on the man to bring up farms as a superior investment. They actually produce something over time, whether it be corn or soybeans, and they’re not just going to sit around, collect dust, and cost you money for its upkeep.

While Bitcoin is a lower-cost way of transacting large sums of wealth, the risks of holding it in a wallet should not be discounted. If you lose your keys and can’t access your wallet, there’s no Bitcoin customer service line that can help you unlock it with a few security questions. Everyday investors have lost much Bitcoin, and most of it is gone for good! That’s why I’m a huge advocate of owning Bitcoin ETFs over actual Bitcoins in a wallet.

You wouldn’t hoard gold bars. So, don’t hoard excessive amounts of Bitcoin in one wallet!

If you wouldn’t stash gold bars under your bed, why would you stash its equivalent in Bitcoin around the house? While Bitcoin ETFs can cost you a considerable amount in management fees, I’d argue that they’re well worth paying up for, especially if you truly believe in Bitcoin and blockchain. Insist on a proven custodian with low fees, and you’ll minimize the security risks that can accompany Bitcoin ownership. The same goes with gold ETFs.

Costs of securing an unproductive asset can add up over time. And that’s why Warren Buffett isn’t tempted in the slightest by Bitcoin’s run. Heck, he probably finds Bitcoin even more unattractive now that “the herd” is piling in at a rampant rate. The man’s seen bubble inflate and burst over his investment career, so don’t think he’ll be so quick to change his tune.

Warren Buffett: Where’s the value at?

Warren Buffett has been busy backing up the truck on cheap dividend stocks in the fourth quarter. His bet on Chevron is a sign that the oil patch isn’t dead yet and that there’s deep value to be had in the unloved sector. Naturally, Suncor Energy (TSX:SU)(NYSE:SU), the Oracle’s preferred way to bet on Alberta’s oil patch, is the way to go if you’re looking to ride on the man’s coattails into value.

Today, Suncor shares are riding high on considerable momentum. The dividend, which currently yields a meagre 2.9%, was slashed down the middle and subject to considerable compression due to price appreciation over the last few months.

While Suncor stock isn’t the same steal as it was when I’d pounded the table back when the stock was at $15 and change, I still see ample value in the productive asset, which, unlike Bitcoin or gold, will pay you to wait. As sentiment shifts in the oil patch and the fundamentals gradually improve, I’d look for Suncor to double its dividend within the next two years. The dividend seems small now, but it’s just a matter of time before Suncor stock wins back Canadian income investors.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joey Frenette has no position in any of the stocks mentioned.

More on Stocks for Beginners

Man holding magnifying glass over a document
Stocks for Beginners

3 Cheap Canadian Stocks With P/E Ratios of Less Than 10 Times

The price-to-earnings (P/E) ratio is one of the most basic valuation metrics for investors to find cheap Canadian stocks. It …

Read more »

Caution, careful
Stocks for Beginners

Don’t Get Taxed by Surprise: The TFSA’s Dirty Little Secret

Did you know that you can be taxed in a Tax-Free Savings Account (TFSA)? It’s not common knowledge, but it’s …

Read more »

Question marks in a pile
Stocks for Beginners

New Investors: Do You Need Bonds in Your Investment Portfolio?

The traditional investment portfolio would have a bond and equity component. Do you really need bonds in your investment portfolio? …

Read more »

exchange traded funds
Stocks for Beginners

3 of the Best ETFs to Buy in February

After all that’s gone on in the stock market over the last couple of months, there are many high-quality ETFs …

Read more »

Stocks for Beginners

Planning to Invest? 3 Top TSX Stocks to Buy in Your TFSA

With the Canadian stock market currently going through a downturn, now’s the time to be investing in TSX stocks. The …

Read more »

exchange-traded funds
Stocks for Beginners

3 Top ETFs for Tax-Free Passive Income in Retirement

Looking to earn copious amounts of tax-free passive income in retirement? If so, it pays to hold dividend ETFs in …

Read more »

stock research, analyze data
Stocks for Beginners

The 3 Best Canadian Stocks to Buy During a Market Bottom

The S&P/TSX Composite Index continues to go through a turbulent beginning to 2022. In fact, as of writing it hit …

Read more »

TSX Today
Stocks for Beginners

3 Canadian Growth Stocks to Buy That Are Outperforming in the Recent Volatility

The recent market sell-off has caught a lot of headlines. It’s been quite substantial, but you may have noticed not …

Read more »