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Buffett: Forget Wall Street Advisors, Monkeys Can Do A Better Job

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Billionaire Warren Buffett at Dollar Banknote | Buffett: Forget Wall Street Advisors, Monkeys Can Do A Better Job | featured

Legendary investor and billionaire Warren Buffett lambasted Wall Street advisors last Saturday, saying monkeys can do a better job. During his annual shareholder’s meeting, he criticized Wall Street advisors for “catching the crumbs that fall off the table of capitalism.”

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Warren Buffett: Investing Is A “Simple Game”

Warren Buffet testifies beforeThe House subcommittee | Warren Buffett: Investing Is A “Simple Game” 

During Berkshire Hathaway’s annual gathering. Warren Buffett said that investing is a relatively simple game to play. However, Wall Street advisors convinced the public that it is harder than it really is.

In most cases, monkeys can earn better returns simply by throwing money at random American companies. “You can have monkeys throwing darts at the page,” Buffett said. 

“And, you know, take away the management fees and everything, I’ll bet on the monkeys [over the advisors],” he added.

The American billionaire said that since 1941, the Dow Jones Industrial Average rose from $100 to more than $30,000.

In order to see their investments succeed, people only need to put their money into an American business. Then, watch it grow.  “It’s amazing how hard people make what is a simple game,” Buffett described Wall Street advisors.

However, these professionals won’t make much if they told investors that.  If the public knew how simple it was, “90% of the income of the people that were speaking would disappear.”

Wall Street Advisors Turned Stock Market Into A Gambling Parlor

During his speech, Warren Buffett also slammed Wall Street advisors for encouraging speculative behavior. He said that executives virtually turned 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. 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.”

Buffett noted that Wall Street advisors turned American companies into “poker chips” for market speculation. He cited the soaring use of call options. Brokers make more money from these bets than from simple investing.

Buffet’s long-time investment partner, Charlie Munger, agreed with Buffett. “It’s almost a mania of speculation,” he said. “We have people who know nothing about stocks being advised by stockbrokers who know even less.

It’s an incredible, crazy situation. I don’t think any wise country would want this outcome. Why would you want your country’s stock to trade in a casino?”

Buffett Recommends Low-Cost Index Funds

Until now, Warren Buffett recommends that everyday investors place their money in low-cost index funds. These funds hold every stock in an index, which makes them diversified.

For example, the S&P 500 includes big companies from diverse industries. They include stalwarts such as Coca-Cola, Apple, and Amazon.

In addition, Buffet said that for Americans who want to save up for their retirement, diversified index funds make the most sense. “Consistently buy an S&P 500 low-cost index fund,” Buffett said back in 2017. “Keep buying it through thick and thin, and especially through thin,” he advised. 

Watch the Yahoo Finance video where Warren Buffett and Charlie Munger pick winning stocks, businesses, and more:

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1 Comment

1 Comment

  • Dave says:

    Half truths. A lot of buzz words and sarcastic statements. Are there “investment advisers” that, after taking fees into account, do worse than random picks (i.e. a monkey)? Yes. Are there some that do better? Yes. When we say “investment advisor”, what do we mean? An employee of a large firm that is restricted to what that large firm policy says, or are they a knowledgeable and expirienced independent professional free (and able) to choose stocks that will outpreform the average? Does Wall Street take advantage of regular person investors? Yes they do. Firms that employ “investment advisors” do. (Not the employees themselves, I’m sure most of them do the best they can within the guidelines set by their employers.) Guys like Warren Buffett do. (Note: He is not your friend.) If large numbers of investors are invested in relatively predictable vehicles, like index funds, sophisticated investors can use that information to outperform the market. Index funds are a good place for regular people to invest because finding a good investment advisor is not easy, particularly if you don’t have a lot of funds to invest. (Shock of all shockers, the truely professional advisors work with people of means.) Is an index fund the best vehicle? No, but it might be the best and safest you can do, if you can’t work with a true professional.

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