Warren Buffett on Saturday criticized stock trading platforms like Robinhood that allow buying and selling for free as encouraging a "gambling impulse."
"There is nothing illegal to it, there’s nothing immoral, but I don’t think you build a society around people doing it," he said at Berkshire Hathaway’s annual meeting held virtually this year due to the coronavirus, The Guardian reported.
Buffett lamented that many novice stock traders treat the market like a "casino" and said that choosing a stock that is successful long-term is more difficult than it sounds.
He pointed out that there were more than 2,000 car companies in 1903 and although motor vehicles revolutionized society nearly all of the companies went out of business, according to The Guardian.
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"There’s a lot more to picking stocks than figuring out what will be an incredible industry in the future," he said. "I just want to tell you that it’s not as easy as it sounds."
He said owning an S&P 500 index fund is a better bet for most people.
Robinhood has "become a very significant part of the casino aspect, the casino group, that has joined into the stock market in the last year or year and a half," he said, according to CNBC.
Buffett said American corporations can be a good place for solid investments but they also make great "gambling chips."
"If you cater to those gambling chips when people have money in their pocket for the first time and you tell them they can make 30 or 40 or 50 trades a day and you’re not charging them any commission but your selling their order flow or whatever," he said. "I hope we don’t have more of it," CNBC reported.
The Robinhood app found itself in hot water earlier this year during the GameStop buying frenzy.
The Berkshire meeting is usually held in Omaha and can attract around 40,000 investors but was held in Los Angeles this year to accommodate vice-chairman Charlie Munger.
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Munger agreed with Buffett’s assessment of Robinhood. "I think it’s just god awful that something like that brought investments from civilized men and decent citizens," he said, according to CNBC. "It’s deeply wrong. We don’t want to make our money selling things that are bad for people."