In a battle of the old guard against retail disruptors in the investing world, popular trading app Robinhood Financial is clapping back at the legendary billionaire investor Warren Buffett, who suggested over the weekend that Robinhood was like a “casino” for gamblers.
The Berkshire Hathaway chairman and his vice chairman, Charlie Munger—both of whom are in their 90s—just “insulted a new generation,” wrote Jacqueline Ortiz Ramsay, head of public policy communications at Robinhood, in a blog post Monday.
“If the last year has taught us anything, it is that people are tired of the Warren Buffetts and Charlie Mungers of the world acting like they are the only oracles of investing,” Ramsay wrote. “And at Robinhood, we’re not going to sit back while they disparage everyday people for taking control of their financial lives.”
What triggered Ramsay’s ire were comments Buffett and Munger made about Robinhood at Saturday’s annual meeting of Berkshire Hathaway, which is widely considered one of the world’s most successful public companies. “It’s become a very significant part of the casino aspect, of the casino group that has joined into the stock market in the last year, year and a half,” Buffet said. “I think the degree to which a very rich society can reward people who know how to take advantage essentially of the gambling instincts of, not only American public, worldwide public, it’s not the most admirable part of the accomplishment.“
Munger added, “I think it's just God awful that something like that would draw investment from civilized men and decent citizens. It's deeply wrong. We don't want to make our money selling things that are bad for people.”
Robinhood has taken credit for attracting a new generation of young retail investors into the market with its commission-free trading app. Earlier this year, some Robinhood traders used online forums on Reddit to plot how to band together to juice up stocks and squeeze out Wall Street. Meanwhile, regulators have admonished Robinhood and its app for aggressively luring inexperienced investors into trading and misleading its users on the prices of their trades and how it makes money. Even so, Robinhood is still planning to go public and continues to beef up its offerings for users and to stand by its business of “democratizing finance for all.”
In the blog post, Ramsay countered the Berkshire Hathaway leaders by saying “elites” built massive wealth from the stock market, which was inaccessible to those who had little money, and widened the divide between the haves and the have-nots. “Suddenly, Robinhood and other online trading platforms have opened the doors of financial markets to everyday people, deeply unsettling the old guard who will fight to keep things the same,” she wrote.
“At Robinhood, people now don’t need thousands of dollars to begin investing,” she said. “We pioneered commission-free trading, and fractional shares make it possible for people with less money to invest in a piece of a stock”—even in Berkshire Hathaway, whose class A shares last traded at $420,000 each. “Technology is the great equalizer,” Ramsay said.