Warren Buffett criticized SPACs andRobinhood atBerkshire Hathaway 'sannual meeting .- The investor said they encourage gambling and treating the stock market like a casino.
Charlie Munger , Buffett's right-hand man, damned both trends as well.- See more stories on Insider's business page.
Warren Buffett blasted special-purpose acquisition companies (SPACs) and the Robinhood trading app for encouraging gambling on stocks at Berkshire Hathaway's annual meeting on Saturday.
The famed investor and Berkshire CEO said that SPACs, also known as blank-check companies, were taking advantage of amateur investors and making unrealistic promises. "You stick a famous name on it and you can sell almost anything," he said.
Buffett's right-hand man, Charlie Munger, said that the proliferation of SPACs was a "moral failing" to an extent.
"The easy money made by SPACs and derivatives and so on - you push that to excess, it causes horrible problems for the civilization."
Buffett bemoaned the fact that Wall Street profits most when
"You have this incredible, huge asset to humanity but it really makes its money when people are doing stupid things," he said.
Buffett said that a rising number of people are treating the stock market like a casino, and reiterated his analogy that day traders and speculators are like Cinderella at the ball.
"More people are entering the casino than are leaving everyday," 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."
Buffett also shared his thoughts on Robinhood, which many amateur investors and day traders have flocked to in recent months.
"It's become a very significant part of the casino group that has joined to the stock market" over the past 12 to 18 months, Buffett said.
The investor doesn't see buying and selling put and call options - leveraged bets on whether stocks and other assets will rise or fall in value over a period of time - as illegal or immoral. "But I don't think you build a society around people doing it," he said.
Munger went further in criticizing Robinhood and other trading apps for enabling speculation.
"It's not just stupid, it's shameful," he said. "It's deeply wrong."
A Robinhood spokesperson provided the following statement to 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 future is diverse, more educated, and propelled by engaging technologies that have the power to equalize.
"Adversaries of this future and of change are usually those who've enjoyed plentiful privileges in the past and who don't want these privileges disrupted. Their criticisms are unfortunate but they prove why Robinhood's mission is in fact critical.
"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."