Robinhood presents blistering retort to ‘elitist’ criticisms from Munger

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Robinhood fired again at Berkshire Hathaway vice chairman Charlie Munger, who earlier this week mentioned the free-trading app was having a “regrettable” influence on buyers.

The longtime enterprise accomplice of Warren Buffett on Wednesday addressed the working controversy over Robinhood and comparable functions, noting risks from the attract of straightforward, free buying and selling.

“Nobody ought to imagine Robinhood trades are free,” Munger, 97, mentioned. “The frenzy is fed by people who find themselves getting commissions and different revenues out of this new bunch of gamblers.”

He added that the app has created “a tradition which inspires as a lot playing in shares by individuals who have the mindset of racetrack bettors. … It is a soiled manner of earning money.”

A press release Thursday from a Robinhood spokesman took sharp exception to the remarks.

“In a single fell swoop a complete new era of buyers has been criticized and this commentary overlooks the cultural shift that’s going down in our nation as we speak,” the assertion mentioned. “Robinhood was created to permit individuals who do not have entry to generational wealth or the sources that include it to start investing within the U.S. inventory market. To recommend that new buyers have a ‘mindset of racetrack bettors’ is disappointing and elitist.”

Each commentaries referred to a current groundswell amongst retail buyers who’re combining the comfort and free trades of Robinhood with viral platforms offered by social media, significantly the Reddit message boards.

In probably the most obtrusive instance, buyers have piled into GameStop, a closely shorted inventory that has seen its value explode greater in current weeks amid a surge in Robinhood-based trades that created an enormous brief squeeze.

Although the hypothesis has created intense market volatility, Robinhood asserted that its product is offering alternative.

“It ought to be celebrated that we’re seeing market buyers start to diversify, and that schooling and consciousness concerning the values of investing are diffusing additional into beforehand untapped generations,” the assertion mentioned.

Munger is not the one Robinhood critic – others have accused it of turning inventory buying and selling right into a harmful sport, from which it advantages by way of fee for order movement, or the cash that market makers give the corporate for buying and selling quantity.

“Nobody ought to imagine Robinhood trades are free,” Munger mentioned. “The frenzy is fed by people who find themselves getting commissions and different revenues out of this new bunch of gamblers.”

https://www.cnbc.com/2021/02/25/robinhood-offers-blistering-retort-to-elitist-criticisms-from-munger.html