https://www.cnbc.com/2022/04/30/war...-the-stock-market-into-a-gambling-parlor.html 2022 Berkshire Annual Meeting Published Sat, Apr 30 2022 Hugh Son Key Points Berkshire Hathaway CEO Warren Buffett lambasted Wall Street for encouraging speculative behavior in the stock market, effectively turning it into a “gambling parlor.” Buffett, 91, spoke at length during his annual shareholder meeting Saturday about one of his favorite targets for criticism: investment banks and brokerages. “Wall Street makes money, one way or another, catching the crumbs that fall off the table of capitalism,” Buffett said. “They don’t make money unless people do things, and they get a piece of them. They make a lot more money when people are gambling than when they are investing.” Sometimes the market’s investment oriented and other times, it’s a casino, says Warren Buffett Berkshire Hathaway CEO Warren Buffett lambasted Wall Street for encouraging speculative behavior in the stock market, effectively turning it into a “gambling parlor.” Buffett, 91, spoke at length during his annual shareholder meeting Saturday about one of his favorite targets for criticism: investment banks and brokerages. “Wall Street makes money, one way or another, catching the crumbs that fall off the table of capitalism,” Buffett said. “They don’t make money unless people do things, and they get a piece of them. They make a lot more money when people are gambling than when they are investing.” Buffett bemoaned that large American companies have “became poker chips” for market speculation. He cited soaring use of call options, saying that brokers make more money from these bets than simple investing. Still, the situation can result in market dislocations that give Berkshire Hathaway an opportunity, he said. Buffett said that Berkshire spent an incredible $41 billion on stocks in the first quarter, unleashing his company’s cash hoard after an extended lull. Some $7 billion of that went to snap up shares of Occidental, bringing up his stake to more than 14% of the oil producer’s shares. “That’s why markets do crazy things, and occasionally Berkshire gets a chance to do something,” Buffett said. “It’s almost a mania of speculation,” Charlie Munger, 98, Buffett’s long-time partner and Berkshire Hathaway vice chairman, chimed in. “We have people who know nothing about stocks being advised by stock brokers who know even less,” Munger said. “It’s an incredible, crazy situation. I don’t think any wise country would want this outcome. Why would you want your country’s stock to trade on a casino?” Retail traders flooded into the stock market during the pandemic, boosting share prices to records. Last year, the frenzy was fueled further by meme-inspired trading from Reddit message boards. But the stock market has turned this year, putting many of those new at-home traders in the red. The Nasdaq Composite, which holds many of the favorite names of small traders, is in a bear market, down more than 23% from its high after an April crush. Warren Buffett has a long history of deriding investment bankers and their institutions –saying that they encourage mergers and spinoffs to reap fees, rather than improve companies. He typically shuns investment bankers for his acquisitions, calling them pricey “money shufflers.” Buffett’s $848.02 per share offer for insurer Alleghany reportedly excludes Goldman’s advisory fee. Earlier in the session, he noted that Berkshire would always be cash-rich, and in times of need, would be “better than the banks” at extending credit lines to companies. An audience member made an inaudible comment while he was talking. “Was that a banker screaming?” Buffett joked.
That's funny. I don't recall Buffett saying much a couple years ago when the Fed and govt were blowing up the bubble and causing the inflation we now see. That fueled the crazy speciation. The idea that no matter what happens, the dip will only last a few months before the Fed comes to the rescue and bails everyone out. Not brokers or bankers. He must have been too busy selling airlines and oil companies near the bottom back then.
Gambling parlor ? Old news, They don't even go after the most blatant and obvious daily scams , ipo scams, rug pulls. They don't care.
Yeah i have noticed that too. I have never seen any clips of Buffet ever criticising the Fed. But a least Buffet encourages everyone to invest for the long term which is the easiest protection most people have from the fed and govt money printing. Short term trading, 98% you will lose money and just make the brokers rich. But buy and hold is so boring, and doesn't offer the get rich quick illusion that short term trading offers.
Buy and hold is boring if you sink too much capital into too few stocks. That's where you run out of money fast and increase risk because of too much money banked on a few eggs. If an investor becomes less greedy, then they can spread risk plus have fun because they are playing a wider market.
That sounds a bit too much like what 'Ms Johhny Come Lately' does I know she isn't diversified enough and not what you meant, but most people are just better off holding SPY.
Buffett isn't being entirely honest. He knows that he can't make money if everyone else is as smart and rational as himself.
When everyone is more equally matched the game becomes harder for everyone, but a few big winners still emerge. There seems to be a universal law. Where even very small advantages eventually get amplified exponentially. Its like sport, at the highest levels there isn't a huge difference in talent. But the very best are often consistently win more often than the rest. And earn way more than the rest.
Calm down Warren, speculators make markets and provide liquidity thereby reducing risk for more conservative participants like investors and hedgers. In return for making markets, providing liquidity and absorbing risk, they reserve the right to make a profit. Sometimes they do and sometimes they don't but that's capitalism.