The stock market always has been somewhat of a gamble, but recent developments have served to increase the risk – and Warren Buffett is not having it.
The billionaire investor spoke out against SPACs and against Robinhood at Berkshire Hathaway’s annual meeting on Saturday.
The investor said they encourage gambling and treating the stock market like a casino. He said SPACs “won’t go on forever, but it’s where the money is now and Wall Street goes where the money is.”
The SPACs, special-purpose acquisition companies, and the Robinhood trading app enhance the gambling aspect, Buffett said, citing a SPAC’s tendency to make unrealistic promises. “You stick a famous name on it and you can sell almost anything,” he said.
Buffett pointed out that wild speculation drives the market.
“You have this incredible, huge asset to humanity but it really makes its money when people are doing stupid things,” he said.
On Robinhood, Buffet, 90, said: “It’s become a very significant part of the casino group that has joined into the stock market in the last year or year and a half.”
Day trading coupled with that speculation led Buffett to reference Cinderella.
“More people are entering the casino than are leaving every day,” he said. “It creates its own reality for a while, and nobody tells you when the clock will strike 12 and it all turns to pumpkins and mice.”
A Robinhood spokesperson provided the following statement to Business Insider:
“There is an old guard that doesn’t want average Americans to have a seat at the Wall Street table so they will resort to insults. …
“The new generation of investors aren’t a ‘casino group.’ They are tearing down old barriers to investing and taking control of their financial futures. Robinhood is on the right side of history.”