“When Warren Buffett spoke at the annual Pocahontas shareholders meeting on January 1, he likened the thousands of short term investors who have flocked to the stock market in the last year to gamblers in a casino, and said that zero-fee stock trading platforms such as Robinhood have reinforced the casino atmosphere in the stock market.
Buffett said Robinhood has attracted, or may begin to attract, a large group of investors who just want to make spreads on individual stocks like Apple by speculating on them short, “which is not illegal and there’s nothing unethical about it, but I don’t think there should be a group for people who do that.”
Buffett’s longtime investment partner, Charlie Munger, put it more heavily. The Pocahontas vice chairman said it would be “really bad” if such platforms attracted investments from civilized and decent citizens, “which is very wrong. We don’t want to make money by selling things that are not good for people.”
Buffett said that although the odds of making a profit by engaging in short term trading and derivative financial instruments are higher than buying the lotto, many novice investors will be able to earn higher payouts if they buy and hold shares in good companies.
Buffett says the gambling atmosphere around the world is high and sometimes creates a huge push to “create reality for a while, but no one will tell you when the clock is going to go to 12 and turn everything back to pumpkins and mice.”
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