Back in February of last year, Robinhood ran their Super Bowl commercial arguing that investors aren’t made, but born. That trading stock is as natural as sticking your thumb in your mouth and reaching for the mobile dangling over the crib.
My reaction was not subtle. I wrote that:
“In an era where millions are easily seduced by immediate gratification and self-flattery, and suspicious of any kind of earned expertise, Robinhood’s “We Are All Investors” ad might be the most dangerously misleading commercial in Super Bowl history.”
Now a year later Warren Buffett and Charlie Munger are echoing my sentiments, and have launched the ‘Guns of Omaha’ on Robinhood, with an apocalyptic Munger saying: “It was disgusting. Now it’s unraveling… God is getting just. … There’s been some justice.”
At last year’s Woodstock of capitalism, Munger also absurdly stated: “We don’t want to make our money selling things that are bad for people.” (For the record, here’s what drinking a can of Coke – 9.2% of the Berkshire portfolio – does to your body.)
Buffett has been on the record saying that Robinhood caters to the gambling instincts of investors and promotes casino-like behavior.
Do you hear something? That noise is my hypocrisy meter going bonkers.
Activision, which represents over 9% of Berkshire Hathway’s portfolio, made $5.1 billion from in-game purchases in 2021. That’s gambling with no chance of an economic victory, just the ability to get to the next level.
But wait, there’s even more. Bank of America, which owns Merrill Lynch and represents 12.8% of the Berkshire portfolio, is sounding very much like Robinhood. In fact, while Robinhood has pulled back from their “we are all natural investors” appeal – their website now modestly promises “Investing is Simple Here” – Merrill Lynch tells investors that their online trading platform gives you “guidance, insights and tools to confidently put your investing ideas into action.”
That’s no different than what the Robinhood platform offers. You don’t need the experts, it promises, just your own good ideas.
Lastly, if Buffett and Munger are going to ride their moral high horses into battle with Robinhood, they need to explain why Itochu, which represents 5.6% of the portfolio, is continuing to do business with Russia.
I hold to my original perspective that preying on our cognitive biases, minimizing the expertise involved in investing, and manipulating hopefulness is wrong and I feel the same way about the proliferation of seductive online sports betting advertising unleashed by the Supreme Court’s 2018 decision. For Buffett and Munger to slam Robinhood for behaving in the same way as their portfolio companies, is a hypocritical moral sham.