Warren Buffett and Charlie Munger Blasted By Robinhood For ‘Insulting A New Generation’ of Retail Traders

Over the weekend, Berkshire Hathaway (NYSE: BRK-A), (NYSE: BRK-B) billionaires Warren Buffett and Charlie Munger criticized the business model of online brokerages like Robinhood, claiming that such trading apps take advantage of new investors’ “gambling instincts”.

“Robinhood has become a very significant part of the casino aspect of the casino group that has joined into the stock market in the last year or year and a half,” Buffett said, arguing that the platform’s unlimited commission-free trades model prompts a casino like atmosphere.

The Wall Street Journal reported that Robinhood’s order flow payment more than tripled in the first quarter of 2021 from a year ago to $331 million as millions of inexperienced day traders downloaded the app.

Munger agreed with Buffett’s comments, saying it was “god awful that something like that brought investments from civilized men and decent citizens”, most likely referring to a number of highly shorted and thinly traded public companies that have raked in massive gains this year despite weak fundamentals.

“It’s deeply wrong”, Munger noted, adding “|w|e don’t want to make our money selling things that are bad for people.”

Robinhood’s head of public policy communications, Jacqueline Ortiz Ramsay, strongly defended the company following the billionaires’ comments.

“Two of the most iconic investors insulted a new generation this weekend. Why? Because we are doing things a new way”, Ortiz Ramsay wrote on a blog post published on Monday.

Referencing the old guard, Ortiz Ramsay said that Robinhood is not going “to sit back while |the elites which are the ones to have|…amassed huge wealth from decades of investing — driving a deep wedge between the haves and have-nots…disparage everyday people for taking control of their financial lives.”

“Robinhood and other online trading platforms have opened the doors of financial markets to everyday people”, Ortiz Ramsay wrote, “deeply unsettling the old guard who will fight to keep things the same. But change is bullish. When she comes, no one can stop her.”