- Billionaire investor Warren Buffett has likened the millions of inexperienced day traders who have flooded the stock market over the last year to gamblers
- He also slammed commission-free brokerages like Robinhood for promoting a casino-like atmosphere
- Buffett’s long-time business partner, Charlie Munger, echoed the sentiment and also took a swing at bitcoin, calling it “disgusting and contrary to the interests of civilisation”
- Robinhood is facing several lawsuits over its decision in January to curb the trading of GameStop shares
- Massachusetts is also seeking to revoke its broker-dealer licence
Billionaire investor Warren Buffett has likened the millions of inexperienced day traders who have flooded the stock market over the last year to gamblers, and slammed commission-free brokerages like Robinhood for promoting a casino-like atmosphere.
Speaking at Berkshire Hathaway’s annual meeting on Saturday, he said Robinhood has attracted, “maybe set out to attract,” a significant number of people who are simply gambling on short-term price movements.
“There is nothing illegal to it, there’s nothing immoral, but I don’t think you build a society around people doing it,” he said.
However, Buffett’s long-time business partner and Vice Chairman of Berkshire Hathaway, Charlie Munger, was more critical.
“It’s just god-awful that something like that would draw investment from civilized man and decent citizens,” he said.
“It’s deeply wrong. We don’t want to make our money selling things that are bad for people.”
Munger also took a swing at bitcoin, calling it “disgusting and contrary to the interests of civilisation.”
“Of course I hate the bitcoin success,” he said.
“I don’t welcome a currency that’s so useful to kidnappers and extortionists and so forth, nor do I like just shuffling out of your extra billions of billions of dollars to somebody who just invented a new financial product out of thin air.”
Buffett said that while the odds of profiting from day trading stocks and derivatives are more promising than playing the state lottery, many new investors would have better results buying and holding shares of good companies.
“The gambling impulse is very strong in people worldwide and occasionally it gets an enormous shove,” he said.
“It creates its own reality for a while, and nobody tells you when the clock is going to strike 12 and it all turns to pumpkins and mice.”
Many other critics have said free brokerage platforms can encourage millennials to view trading as a game.
Robinhood played a key but controversial role earlier this year as traders drove huge rallies in the share price of video game retailer GameStop, despite there being no fundamental reason for the frenzy.
The platform is now facing several lawsuits over its decision in January to curb the trading of GameStop shares, as well as those of other companies, and Massachusetts is seeking to revoke its broker-dealer licence.