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Warren Buffett slammed SPACs and Robinhood for encouraging gambling on stocks at Berkshire Hathaway's annual meeting

Published by Business Insider on Sun, 02 May 2021

<p><strong><img src="https://static1.businessinsider.com/image/5e25895c3ac0c9452948fd7b-2400/rtx9t1a.jpg" border="0" alt="warren buffett" data-mce-source="REUTERS/Mario Anzuoni" data-mce-caption="Warren Buffett, CEO of Berkshire Hathaway, takes part in a conversation on leadership and the economy at The Women's Conference 2008 in Long Beach, California October 22, 2008."></strong></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><ul><li><strong>Warren Buffett criticized SPACs and Robinhood at Berkshire Hathaway's annual meeting.</strong></li><li><strong>The investor said they encourage gambling and treating the stock market like a casino.</strong></li><li><strong>Charlie Munger, Buffett's right-hand man, damned both trends as well.</strong></li><li><strong><strong><a href="https://www.businessinsider.com/'hprecirc-bullet">See more stories on Insider's business page</a>.</strong></strong><hr></li></ul><p>Warren Buffett blasted special-purpose acquisition companies (SPACs) and the Robinhood trading app for encouraging gambling on stocks at <a href="https://markets.businessinsider.com/currencies/news/warren-buffett-charlie-munger-berkshire-hathaway-annual-meeting-live-updates-2021-5-1030373616">Berkshire Hathaway's annual meeting on Saturday</a>.</p><p>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.</p><p>Buffett's right-hand man, Charlie Munger, said that the proliferation of SPACs was a "moral failing" to an extent.</p><p>"The easy money made by SPACs and derivatives and so onyou push that to excess, it causes horrible problems for the civilization."</p><p>Buffett bemoaned the fact that Wall Street profits most when markets are rife with speculation.</p><p>"You have this incredible, huge asset to humanity but it really makes its money when people are doing stupid things," he said.</p><p>Buffett said that a rising number of people are treating the stock market like a casino, and reiterated his analogy that <a href="https://markets.businessinsider.com/news/stocks/warren-buffett-warned-against-speculating-day-traders-dont-care-2020-6-1029347328">day traders and speculators are like Cinderella at the ball</a>.</p><p>"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."</p><p>Buffett also shared his thoughts on Robinhood, which many amateur investors and day traders have flocked to in recent months.</p><p>"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.</p><p>The investor doesn't see buying and selling put and call optionsleveraged bets on whether stocks and other assets will rise or fall in value over a period of timeas illegal or immoral. "But I don't think you build a society around people doing it," he said.</p><p>Munger went further in criticizing Robinhood and other trading apps for enabling speculation.</p><p>"It's not just stupid, it's shameful," he said. "It's deeply wrong."</p><p>Robinhood didn't immediately respond to a request for comment from Insider.</p><p><a href="https://markets.businessinsider.com/news/stocks/warren-buffett-slams-spacs-robinhood-market-speculation-berkshire-hathaway-meeting-2021-5-1030373638#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="https://www.businessinsider.com/doomsday-prepper-million-dollar-condo-converted-missile-silo-2019-3">Inside a $3 million doomsday condo that can sustain 75 people for 5 years</a></p>
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