Charlie Munger renews his review of Robinhood, equates app to betting on circuits

He added: “It’s really just wild speculation, like casino games or betting on circuits. There is a long history of destructive capitalism, those commercial orgies launched by the people who profit from it.

Mr. Munger, 97, is the vice president of Berkshire Hathaway Inc. and longtime business partner of Warren Buffett. His comments on Thursday echoed criticisms he had leveled at Robinhood the day before.

These first beards of Mr. Munger caused an acute retort from the brokerage. Robinhood spokeswoman Jacqueline Ortiz Ramsay said Munger’s comment on Wednesday about people with the race bettor mindset was “disappointing and elitist.” Mr Munger made the comment after saying, “It’s really stupid to have a culture that encourages play so much in actions.”

“Suddenly a whole new generation of investors has been criticized and this comment overlooks the cultural change that is happening in our country today,” she said. “Robinhood was created to enable people who do not have access to generational wealth or the resources that come with it to begin investing in the US stock market.”

After listening to Robinhood’s statement in full later Thursday, Mr Munger said: ‘Everyone wants to protect the way they make a living. It’s just human nature. That’s all I want to say about it.

Robinhood recently found itself at the center of the storm around GameStop Corp.

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stocks, which skyrocketed, slumped and rose again amid the frenzy of individual investors. Its chief executive was harshly questioned during a congressional hearing this month.

The brokerage has also come under close scrutiny from Massachusetts securities regulators, who in December criticized the trading platform for exposing clients to “trading risks. unnecessary ”. Customers have long been drawn to the app because of its free stock trading and simple and attractive mobile first platform. Massachusetts regulators, on the other hand, said many of those same characteristics had “gamified” the investment experience.

Robinhood disputed the allegations and previously said it made “significant improvements” to its options trading offering and added guarantees and improved educational material. Last month, the brokerage responded to Massachusetts regulators, saying their complaint distorted the “Robinhood experience.”

The back and forth with Mr Munger began when the particularly outspoken investor was at the Daily Journal’s annual meeting Corp.

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, of which he is president.

At Wednesday’s meeting, Mr Munger, who has previously touted the virtues of patience when investing, was asked about the recent Reddit-fueled frenzy around GameStop. In a sweeping response, Mr Munger said he believed “you should try to make your money in this world by selling other people things that are good for them.”

“If you sell them gambling services, where you make a profit like a lot of these new brokers who specialize in attracting players, I think that’s a dirty way to make money, and I think that we are foolish to allow, ”continued Mr. Munger.

Asked later Wednesday where he saw excesses in the financial system, Munger said this was most evident “in the trading momentum of novice investors drawn to new types of brokerage operations like Robinhood”.

“I think all of this activity is regrettable,” he said. “I think civilization would do better without it.”

Write to Caitlin McCabe at [email protected] and Jason Zweig at [email protected]