Buffett and Munger heap criticism on Robinhood for casino-like atmosphere
Warren Buffett compared Saturday millions of amateur day traders who joined the stock market last year to gamblers and told Robinhood Financial about commission-free brokers with a casino-like environment.
Speaking at the annual meeting of Berkshire Hathaway Inc (BRKa.N), Buffett said that Robinhood has drawn many people who play on short-term market motions in stocks, for example Apple Inc. “Maybe to lure” (AAPL.O).
“Nothing is illegal, nothing unethical, I believe you’re not building a company with people doing it,” he said. “There’s nothing criminal.
Charlie Munger, the long-standing Buffett buddy, was harder.
“This is only god-awful that money from civilised men and respectable people is being drawn from anything similar,” he said. “It’s profoundly incorrect. We don’t want to make our money selling people poor stuff.”
Buffett said many potential investors will get great returns by acquiring and owning shares in strong businesses while the chances of gaining from day trading stocks and futures are better than playing the state lottery.
“The impulse to play is really high in people all over the world and often it gets huge shots,” said Buffett. “For a time, it is creating its own world because when the clock is going to hit, no one informs you and it becomes mice and pumpkins,” he said.
Certain opponents said free trade channels would allow thousands of years to see trade as a game or entertainment.
Brokers such as Robinhood Financial have gained controversy this year when traders rallyed heavily in GameStop Corp (GME.N), the AMC Entertainment Holdings Inc. (AMC.N) computer game retailers’ equity and other stocks, also without a fundamental frenzy.
Chats at platforms such as Reddit’s WallStreetBets were partly used to purchase to ostensibly punish hedge funds with betting on so-called meme securities.
Massachusetts seeks to cancel the brokernel licence. Robinhood faces several legal cases in its January vote to curtail trade in Game Stop and other stocks.