BECKY QUICK: This question comes from Robert Miles in Nebraska.
“The trading apps. What do you think about Robinhood and other trading apps, or fintech companies, enabling all ages and experience to participate in the stock market?”
WARREN BUFFETT: (Laughs) Well, I’m looking forward to reading the S-1 on Robin — that’s the big thing you file with the SEC when you’re going to be offering securities, and —
It’s — you know, 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 or year and a half.
And I do want to say I’m concerned of how they handle the source of income when they say they don’t charge the customer anything. I mean, you know, I’m — it’ll just be interesting to watch how they describe it. I mean, but —
But they — they have attracted — maybe set out to attract — but they have attracted, I think I read where 12 or 13% of their casino participants were dealing in (option) puts and calls.
I looked up on Apple, you know, the number of seven-day calls and 14-day calls outstanding. And I’m sure a lot of that is coming through Robinhood. And that’s a bunch of people writing — they’re gambling on the price of Apple over the next seven days or 14.
There’s nothing, you know — there’s nothing illegal about it. There’s nothing immoral.
But — I don’t think you’d build a society around people doing it. I mean, if a group of — a group of us landed on a desert island, and we knew we would never be rescued, and I was one of the group, and I said, well, I’ll set up the exchange over here. (Laughs) And I’ll trade our corn futures and everything around —
I think — 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 the — not only the American public — worldwide public — it’s, you know, it’s not the most admirable part of the accomplishment.
But I think what America’s accomplished is pretty admirable overall. (Laughs)
And I think actually, you know, American corporations have turned out to be a wonderful place for people to put their money and save. But they also make terrific gambling chips.
And 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 you’re selling your order flow or whatever, it —
I hope we don’t have more of it, I’ll put it that way. And I will be interested in reading the prospectus.
Charlie?
CHARLIE MUNGER: Well, that is really waving the red flag at the bull. (Laughter)
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.
WARREN BUFFETT: But we’ve got the states doing it with the lottery, you know.
CHARLIE MUNGER: No, but that’s bad, too.
WARREN BUFFETT: Yeah, I know. I understand, but I’m saying —
CHARLIE MUNGER: That’s very bad. That’s very bad —
WARREN BUFFETT: Once you —
CHARLIE MUNGER: That’s one of the things that’s wrong with it. It’s getting respectable to do these things.
The states are just as bad as Robinhood.
WARREN BUFFETT: Well, in a sense they’re worse. I mean, they’re really taxing the —
CHARLIE MUNGER: I know it’s — I know, I know.
WARREN BUFFETT: Yeah. They’re taxing hope.
CHARLIE MUNGER: Not only that —
WARREN BUFFETT: And they don’t get much in the way of taxes from me and Charlie than they do —
CHARLIE MUNGER: The states in America replaced the Mafia as the proprietor of the numbers game. That’s what happened.
WARREN BUFFETT: Yep.
CHARLIE MUNGER: They pushed the Mafia aside and said that’s our business, not yours. Doesn’t make me proud of my government.
WARREN BUFFETT: When I was a kid, my dad (Howard Buffett) was in Congress. They had a numbers runner in the House office building (laughs), actually.
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