Charlie Munger renews criticism of Robinhood, compares the app to racing bets

He added: “It’s really just wild speculation, like gambling in casinos or betting on racetracks. There is a long history of destructive capitalism, these commercial orgies animated by the people who profit from them. ”

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

These initial splinters from Mr. Munger generated a strong response from the broker. Robinhood spokesman Jacqueline Ortiz Ramsay said Munger’s comment on Wednesday about people having the mentality of gamblers on racetracks was “disappointing and elitist”. Mr. Munger made the comment after saying, “It is really stupid to have a culture that encourages gambling in stocks so much.”

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

After hearing Robinhood’s statement in full on Thursday, Mr. Munger said: “Everyone wants to protect their way of earning a living. That is just human nature. That’s all I want to say about it. “

Robinhood recently found himself at the center of the storm surrounding GameStop Corp.

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stocks, which soared, plunged and rose again amid the frenzy of individual investors. Its CEO faced tough questions during a Congressional hearing this month.

The brokerage also faced scrutiny from Massachusetts securities regulators, who in December criticized the trading platform for exposing clients to “unnecessary commercial risks”. Customers have long been attracted to the app due to its free stock trading and simple and attractive mobile platform. Massachusetts regulators, by contrast, said that many of those same resources “gamified” the investment experience.

Robinhood contested the allegations and said earlier that he had made “significant improvements” to his options trading offer and added improved safeguards and educational materials. Last month, the broker responded to Massachusetts regulators, saying that their complaint distorted “Robinhood’s experience”.

The comings and goings with Mr. Munger began when the remarkably outspoken investor was at the Daily Journal’s annual meeting Corp.

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, of which he is president.

During Wednesday’s meeting, Mr. Munger, who previously praised the virtues of patience in investing, was asked about the recent frenzy fueled by Reddit around GameStop. In a comprehensive response, Mr. Munger said he believes “you should try to earn your money in this world by selling other people things that are good for them”.

“If you are selling gambling services to them, where you make profits from the top like many of these new brokers who specialize in attracting players, I think it is a dirty way to make money, and I think we are crazy for allowing it,” he continued Mr. Munger.

Asked later on Wednesday, where he saw an excess in the financial system, Mr. Munger said it was most striking “at the time of trading by novice investors attracted to new types of brokerage operations like Robinhood.”

“I think all of this activity is unfortunate,” he said. “I think civilization would be better off without it.”

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