Warren Buffett tore up Wall Street for turning the stock market into a ‘gambling hall’ 2022-04-30 10:41:15

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Berkshire Hathaway Executive Director Warren Buffett Wall Street has been criticized for encouraging speculative behavior in the stock market, effectively turning it into a “gambling hall”.

Buffett, 91, spoke at length during his annual shareholder meeting on Saturday about one of his favorite targets for cash: investment banking and brokerage.

“Wall Street makes money, one way or another, by picking up 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 it. They make more money when people gamble than when they invest.”

Buffett bemoaned the big American companies that had “become poker chips” to speculate on the market. He pointed to the increasing use of call options, saying that brokers make more money from these bets than from a simple investment.

However, he said, the situation could lead to market turmoil that would give Berkshire Hathaway a chance. Buffett said Berkshire spent $41 billion on stocks in the first quarter, unleashing the company’s stockpile of cash after a long lull. Some 7 billion dollars went from it to acquire shares OccidentalAnd he raised his stake to more than 14% of the shares of oil producers.

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

“Almost an obsession with speculation,” Charlie Munger98, Buffett’s longtime partner and vice president of Berkshire Hathaway, Harmonious.

“We have people who know nothing about stocks that are recommended by stockbrokers who know even less,” Munger said. “It’s an amazing, crazy situation. I don’t think any wise country would want that outcome. Why would you want your country’s shares to be traded in a casino?”

Retail traders flocked to the stock market during the pandemic, driving stock prices to record levels. In the past year, that craze has been further driven by meme-inspired circulation of Reddit message boards. But the stock market has turned this year, putting many of these local traders in the red. The Nasdaq Composite Index, which has many favorite names for small traders, is in a bear market, down more than 23% from its post-April crush high.

Warren Buffett has a long history of mocking investment bankers and their institutions, saying that they encourage mergers and subsidiaries to reap fees, rather than improve companies.

He usually avoids investment bankers because of his acquisitions, calling them expensive “money manipulators.” Buffett’s $848.02 per share bid for Alleghany insurer is said to be exclude Goldman Consulting Fee.

Earlier in the session, he noted that Berkshire will always be cash-rich and, in times of need, it will be “better than banks” at extending lines of credit to businesses. An audience member made an inaudible comment as he spoke.

“Was that a banker shouting?” Buffett joked.

(Follow us for live updates and a live feed of the annual meeting here.)

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