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

Stock MarketsFeb 24, 2021 03:56PM ET
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2/2 © Reuters. FILE PHOTO: FILE PHOTO: Trading information for GameStop is displayed on the Robinhood App 2/2

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.

"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."

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

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Comments (6)
Ace Music
Ace Music Feb 24, 2021 4:59PM ET
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his comments about " *** at the end my me laugh more than it should
Radu Urjan
Radu Urjan Feb 24, 2021 4:20PM ET
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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.
Arthur Santos
Arthur Santos Feb 24, 2021 4:20PM ET
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Radu has no idea what he is talking about. Another missed opportunity to be quiet.
Ricardo Diogo
rcd72 Feb 24, 2021 4:10PM ET
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happily there are still people with brains and with their foots on the ground....to say simple clean truths!
George Roshtein
George Roshtein Feb 24, 2021 4:08PM ET
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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.
Mohamed Dupont
Mohamed Dupont Feb 24, 2021 3:39PM ET
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Clo wn
Ricardo Diogo
rcd72 Feb 24, 2021 3:39PM ET
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having some respect to someone so experienced is never to much...
Stratus Angelacus
Stratus Angelacus Feb 24, 2021 3:03PM ET
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Charlie Mainman to me !
 
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