Warren Buffett rips Wall Street for turning the stock exchange into ‘a betting parlor’

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Warren Buffett rips Wall Street for turning the stock market into ‘a gambling parlor'

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Berkshire Hathaway CEO Warren Buffett berated Wall Street for motivating speculative habits in the stock exchange, efficiently turning it into a “gambling parlor.”

Buffett, 91, spoke at length throughout his yearly investor conference Saturday about among his preferred targets for criticism: financial investment banks and brokerages.

“Wall Street makes money, one way or another, catching the crumbs that fall off the table of capitalism,” Buffett stated. “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 regreted that big American business have “became poker chips” for market speculation. He mentioned skyrocketing usage of call alternatives, stating that brokers make more cash from these bets than basic investing.

Still, the circumstance can lead to market dislocations that offer Berkshire Hathaway a chance, he stated. Buffett stated that Berkshire invested an unbelievable $41 billion on stocks in the very first quarter, releasing his business’s money stockpile after a prolonged lull. Some $7 billion of that went to get shares of Occidental, raising his stake to more than 14% of the oil manufacturer’s shares.

“That’s why markets do crazy things, and occasionally Berkshire gets a chance to do something,” Buffett stated.

“It’s almost a mania of speculation,” Charlie Munger, 98, Buffett’s veteran 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 stated. “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 exchange throughout the pandemic, improving share rates to records. Last year, the craze was sustained even more by meme-inspired trading from Reddit message boards. But the stock exchange has actually turned this year, putting a lot of those brand-new at-home traders in the red. The Nasdaq Composite, which holds a lot of the preferred names of little traders, remains in a bearish market, down more than 23% from its high after an April crush.

Warren Buffett has a long history of deriding financial investment lenders and their organizations– stating that they motivate mergers and spinoffs to enjoy costs, instead of enhance business.

He usually avoids financial investment lenders for his acquisitions, calling them costly “money shufflers.” Buffett’s $84802 per share deal for insurance company Alleghany supposedly omits Goldman’s advisory cost.

Earlier in the session, he kept in mind that Berkshire would constantly be cash-rich, and in times of requirement, would be “better than the banks” at extending line of credit to business. An audience member made an inaudible remark while he was talking.

“Was that a banker screaming?” Buffett joked.

(Follow along to live updates and a live feed of the yearly conference here)