Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Charlie Munger warns of market 'frenzy'; frowns on gambling mentality, bitcoin, SPACs

Published 02/24/2021, 01:28 PM
Updated 02/24/2021, 03:56 PM
© Reuters. FILE PHOTO: FILE PHOTO: Trading information for GameStop is displayed on the Robinhood App

© Reuters. FILE PHOTO: FILE PHOTO: Trading information for GameStop is displayed on the Robinhood App

By Jonathan Stempel

(Reuters) - Charlie Munger, the longtime business partner of Warren Buffett, on Wednesday warned that the stock market bears signs of a bubble, reflecting a "dangerous" mentality among some investors to gamble on stocks as they would horse races.

Munger, 97, lamented the recent mania for GameStop Corp (NYSE:GME), in which amateur investors encouraged each other online to buy the gaming retailer on platforms including Robinhood, and caught some hedge funds in a short squeeze.

"It's really stupid to have a culture which encourages as much gambling in stocks by people who have the mindset of racetrack bettors," he said.

"A lot of them crowd in to buying stocks on frenzy, frequently on credit, because they see that they're going up, and of course that's a very dangerous way to invest."

Asked if the market resembled the late-1990s dot-com bubble, Munger said: "Yes, I think it must end badly, but I don't know when."

Munger was speaking at the annual meeting of Daily Journal Corp, the Los Angeles newspaper publisher he chairs, which was broadcast on Yahoo Finance.

He is better known as vice chairman of Buffett's conglomerate Berkshire Hathaway (NYSE:BRKa) Inc since 1978.

Munger said investors should not buy gold or bitcoin, noting the latter was too volatile to become a "medium of exchange for the world."

He paraphrased author Oscar Wilde's quotation about fox hunting to describe bitcoin, calling it "the pursuit of the uneatable by the unspeakable."

Munger also expressed disdain for the surging demand for special purpose acquisition companies, or SPACs, which raise money from investors and then merge with private companies to take them public, in "blank check" arrangements.

"The world would be better off without them," Munger said.

© Reuters. FILE PHOTO: FILE PHOTO: Trading information for GameStop is displayed on the Robinhood App

"This kind of crazy speculation in enterprises not even found or picked out yet is a sign of an irritating bubble," he said. "It's just that the investment banking profession will sell shit as long as shit can be sold."

Latest comments

his comments about " *** at the end my me laugh more than it should
This guy and others like him are using the stock market as a casino for over 100 years and until now they were the casino owners. The same guys gambled the entire US economy in 2008 and nobody paid for that. Now, when normal folks are playing the same dirty game they are suddenly mad.
Radu has no idea what he is talking about. Another missed opportunity to be quiet.
happily there are still people with brains and with their foots on the ground....to say simple clean truths!
Reuters is paid by government to FUD bitcoin, so bankers can buy more. hold and do not sell. they can't ban bitcoin, so they are trying to accumulate from you.
Clo wn
having some respect to someone so experienced is never to much...
Charlie Main😊man to me !
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.