Billionaire investor and philanthropist Warren Buffett has blasted Wall Street, saying that speculative behavior is largely encouraged and that this is turning the stock market into a “gambling parlor.”
“Wall Street makes money, one way or another, catching the crumbs that fall off the table of capitalism,” Buffett said during his annual shareholder meeting Saturday.
“They don’t make money unless people do things, and they get a piece of them. They make a lot more money when people are gambling than when they are investing.”
The Berkshire Hathaway CEO highlighted the short-term uncertainty of the increasingly volatile market.
“The interesting thing is, obviously, we haven’t the faintest idea what the stock market is going to do when it opens on Monday,” Buffett said.
READ MORE: Buffett U-turns on ‘rat poison,’ pours in $1bnAccording to Buffett, large American companies have “became poker chips” for market speculation. He cited the soaring use of call options, saying that brokers make more money from these bets than from simple investing.
The billionaire admitted that such a situation can result in market dislocations that give Berkshire Hathaway an opportunity.
He said that the conglomerate spent an incredible $41 billion on stocks in the first quarter of this year, unleashing an accumulated cash pile after an extended lull.
“That’s why markets do crazy things, and occasionally Berkshire gets a chance to do something,” Buffett said.
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