Charlie Munger of Berkshire Hathaway had some choice words, not all of them kid-friendly, for the kind of “crazy speculation” the young traders of Robinhood and the like have been engaging in. A Robinhood spokesman, Jacqueline Ortiz-Ramsay, shot back:
“In one fell swoop an entire new generation of investors has been criticized and this commentary overlooks the cultural shift that is taking place in our nation today … Robinhood was created to allow people who don’t have access to generational wealth or the resources that come with it to begin investing in the U.S. stock market. To suggest that new investors have a ‘mindset of racetrack bettors’ is disappointing and elitist.”
Okay. So we know Robinhood is disappointed and thinks Munger’s critique “elitist”, but that doesn’t make it wrong. Robinhood, which aspires to take its stock public, presumes to speak for “an entire generation”. Meanwhile Charlie Munger, one of the most successful investors alive, may have learned a thing or two about investing in his 97 years. Robinhood attempts to exploit a trumped up generational divide as an emotional ploy to defend trading tactics which Munger criticizes on the basis of merit.
Sorry, but Charlie is right. The basics of investing are timeless, not subject to generational whim. A generation ago, I myself was part of “an entire new generation” swept up in the dotcom mania. It was a “new era”. We were sure we knew it better than our elders, just as some paint the new generation of today. I watched friends and coworkers plow into the electronic tulips of 1999, as they cheered each other on with water cooler chatter and email messages. And I also watched as the chatter and messages fell silent over the course of the following year.
The thing that kept me from losing my shirt along with my friends was a respect for gray hair. I realized market history had not just begun the day I started investing, and wanted to benefit from the experience of those who went before. I thought market past might have something important to say about the future, and sought out the wisdom of the gray haired folks who had been there.
Charlie Munger was one of them even when I was a young investor, so he’d be today’s newbie’s gray hair squared. He’s seen a few new generations come and go. Robinhood insiders might not like what he knows or the way he says it, but he’s looking out for their clients’ interests. If Robinhood’s execs want to do the same, instead of trying to pit them against him, they’ll encourage them to listen.