'Big Short' author Michael Lewis says Vanguard is more disruptive than Robinhood - and warns it's a 'fiction' that small investors can consistently beat the market

• "The Big Short" author Michael Lewis said Vanguard is a more disruptive brokerage than Robinhood.
• Technology has made Wall Street characters less colorful today than in the 1980s, he told DealBook.

"The Big Short" author Michael Lewis, known for his non-fiction writing about Wall Street culture, asserted that traditional brokerage Vanguard might be a better choice for investors than commission-free trading app Robinhood.

In an interview with DealBook published Saturday, Lewis argued the eight-year-old investing platform isn't exactly a groundbreaking innovation that has revolutionized stock trading.

"I'm not sure what Robinhood upends — preserving both a fiction and the guts of a screwed up stock market without making a real dent on anything meaningful," he said.

"And the fiction is that people can go into the market and systematically beat the market and you should be doing this with your money."

Robinhood, which went public in July last year, has positioned itself as a Silicon Valley darling on a mission to "democratize investing." The platform's appeal lies in its simplified process of investing, giving users a chance to take control of their own market decisions, while Vanguard is known for index funds and broker-assisted trades.

Counting more than 22 million active users with funded accounts, Robinhood has run into controversy multiple times. For example, it faced backlash for restricting meme-stock trading at the height of the Reddit trader rebellion, and "gamifying" the process of trading.

Michael Burry, the hedge fund manager best known for his role in "The Big Short," has said Robinhood treats investing like a casino game.

"I understand it's fun if you're treating it like a casino," Lewis said. "It is not a very healthy one. I think of Vanguard as being more useful, disruptive than Robinhood, teaching people not to do that."

Even so, Lewis said he personally hasn't felt a responsibility to shield small investors from potentially risky trading platforms — especially because today's investors want to have a go at making huge gains themselves.

"The reflex of the old small investor was 'how come you didn't protect me,' right?," he said. "There is maybe more of a libertarian streak in the loudest of the punters in the stock market."

Lewis' first book, "Liar's Poker," is based on his experience as a bond salesman in the late 1980s. While he originally meant for it to be an exposè on Wall Street culture, it's been embraced as a manual on how to work at the big banks.

He shared his views on present-day Wall Street, saying technology has made the characters "less rich" than those in the '80s.

"It's more like there's a flatness to it that technology has encouraged. The old characters of that era were sort of smashing the aisles. They were disrupting Wall Street in all kinds of ways."

Lewis also touched on the possibility of writing Elon Musk's biography. The Tesla and SpaceX CEO is one of the most influential business leaders and the richest person in the world.

"Look, if Elon Musk invited me to ride shotgun with him, of course I would," he said. "I just don't think he would. I don't think I'm the writer he has in mind."

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