Former SEC chair on the market risks even meme stock traders can’t afford to ignore
Eric Rosenbaum, 20 June 2021
The Wall Street establishment and the Reddit, Robinhood-fueled meme stock traders don’t see eye to eye, on just about anything. In fact, rolling eyes at the stock market’s traditional ways is inherent in trades like GameStop and AMC Entertainment.
Warnings from the market greats, like Warren Buffett, may as well be a badge of honor among the new traders. But one thing Buffett hasn’t noted in his criticisms of the “casino” atmosphere of this bull market and companies like Robinhood, which he has thoroughly beat on, is that when he was a young investor himself he had a fondness for “cigar butt” stocks — the dregs of the market, companies with a few puffs left in them — before he graduated to a more refined kind of investing that made him a billionaire. And that Buffett footnote raises an important point about the market’s newest investors.
The retail trading phenomenon has led to debate about whether getting investors into the market is the key, not how they get there, and what’s occurring today will do more for long-term wealth creation than blaring about “gambling” in stocks and scaring people away from participating in the market.
