https://www.cnbc.com/2022/04/30/cha...stly-unraveling-for-disgusting-practices.html 2022 Berkshire Annual Meeting Charlie Munger says the Robinhood trading app is justly ‘unraveling’ for ‘disgusting’ practices Published Sat, Apr 30 2022 Hannah Miao Charlie Munger says Robinhood is ‘unraveling’ for its ‘disgusting’ behavior Berkshire Hathaway Vice Chairman Charlie Munger blasted stock trading app Robinhood on Saturday, saying the company is now “unraveling.” “It’s so easy to overdo a good idea. ... Look what happened to Robinhood from its peak to its trough. Wasn’t that pretty obvious that something like that was going to happen?” Munger said at Berkshire Hathaway’s annual shareholder meeting Saturday. Munger lambasted what he characterized as Robinhood’s “short-term gambling and big commissions and hidden kickbacks and so on.” Robinhood does not charge users commission and generates a majority of its revenue from “payment for order flow,” the back-end payment brokerages receive for directing clients’ trades to market makers. “It was disgusting,” Munger said. “Now it’s unraveling. God is getting just.” Charlie Munger at the Berkshire Hathaway press conference, April 30, 2022. CNBC Robinhood went public last July and shares are down 88% from their August 2021 high. The company rose to prominence during the pandemic and played a key role in some massive short squeezes last year, as retail investors flocked to the app to push meme stock prices higher and inflict pain on short sellers betting against the stocks. Munger in February 2021 amid a wild trading rush first criticized Robinhood for its practices, calling the app’s business model a “dirty way of making money.” The company on Thursday reported a decrease in users and a wider-than-expected loss for the first quarter. Earlier in the week, Robinhood announced it would cut about 9% of full-time employees. Munger’s comments echoed remarks from Berkshire Chairman and CEO Warren Buffett earlier in the meeting ripping on Wall Street for turning the stock market into a “gambling parlor.” “Is it wise to criticize people at all?” Buffett asked. “Probably not, but I can’t help it,” Munger said. Robinhood did not immediately respond to CNBC’s request for comment.
Yeah, but at least Mr Geriatric is doing better than 'Ms Johhny Come Lately' who thought making money was as easy as falling off a wooden boat. You know, that latest financial invention, actively managed Exchange Traded Funds that seeks growth of capital by investing in securities of companies in disruptive technology innovation.
"XYZ is down 45% over the past year but it's an excellent disruptor and will be in the pole position over the next few years, so it's an easy buy in large amounts today....." LOL But to the OP: while I think Munger is a crotchety and often out-of-touch guy (the "old man yells at cloud" meme comes to mind), I do agree w/his comments on RobinHood and the way it gamifed trading and preyed on human psychologies. Order flow payment made it very profitable to do that -- regardless of the outcome to what I presume were regular, generally uninformed/inexperienced, retail investors. But as we say, YMMV, and do your own diligence ... you reap what you sow!
NQ (black) vs ARKK (blue) 12 months. Got a huge way to go to recover, personally doubt it will for some years if ever.
"But its holdings are so disruptive and transformative! You just need to be a little patient...." /sarc
Munger is a crotchety dinasour who doesn't appear to know what he's talking about. Robinhood doesn't make money off commission. It isn't different than any other discount broker. He seems to be advocating speculation is only for the select few privileged people. He's a bozo
Let's be fair, these geriatrics benefited from the time of their birth more than their skill. Buffett himself said a few years ago it would be hard to beat the market now.
Considering the way Robinhood screwed their customers in GME and other meme stocks by restricting their trading and Robinhood being undercapitalized to handle trades, I would say Charles Munger is right on target.