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Charlie Munger: No one should believe that Robinhood trading is free

Charlie Munger, vice chairman of Berkshire Hathaway, called Robinhood’s business model a “dirty way to make money” at the annual shareholders’ meeting of the Daily Journal in Los Angeles.

Warren Buffet’s longtime business partner compares the current stock trading craze to the South Sea bubble of 1720 and partially blames brokers, using the order flow payment (PFOF) model to attract amateur investors with free trading services.

“This is the most delightful momentum trading for novice investors attracted to new types of brokerage operations such as Robinhood, and I think this whole business is unfortunate,” said the 97-year-old investor.

The lack of transparency and conflict of interest in the order payment model (PFOF) are some of the issues highlighted by critics who are pushing for a ban on the business model.

Source: Yahoo Finance

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