'They are just doing stupid things': Billionaire investor Leon Cooperman says the rise of Robinhood traders will 'end in tears'
- The billionaire investor Leon Cooperman said the way amateur investors are piling into the stock market was bound to "end in tears."
Marketshave seen a boom in day traders using platforms like Robinhoodto buy stocks in recent months, which has helped boost US indexes.
- That's likely to come tumbling down, Cooperman told CNBC this week, because many of these new investors lack
- "They are just doing stupid things, and in my opinion, this will end in tears," he said.
Amateur investors have been piling in money into different stocks and taking advantage of the market crash over recent weeks, but the billionaire investor Leon Cooperman has rebuked these gains and believes they will "end in tears."
Cooperman, who is the chairman and chief executive of Omega Advisors, told CNBC's "Half-Time Report" on Monday: "They are just doing stupid things, and in my opinion, this will end in tears."The famed investor referred to the online trading platform Robinhood's surge in account openings, with more than 3 million new accounts created this year. Advertisement
Robinhood has more than 13 million users, with an average user age of 31.
Cooperman said many new investors were replacing gambling and sports betting with trading, telling CNBC: "The gambling casinos are closed and the [Federal Reserve] is promising you free money for the next two years, so let them speculate."He added: "Let them buy and trade. From my experience, this kind of stuff will end in tears."
top-notch timing when they rushed to the market as it hit recent lows. Advertisement
"For all the mocking of Robinhood investors, their timing back into the market looks impeccable, with a significant pick-up in holdings as equity markets bottomed in mid-March," Andrew Lapthorne of Societe Generale wrote.
But Peter Cecchini, the former global chief market strategist at Cantor Fitzgerald, said the actions of Dave Portnoy, the founder of Barstool Sports, a punter turned investor, were symptomatic of the dislocation between stock prices and economic reality.Read more: Wall Street's best US and international stock-pickers have tripled their clients' money since 2010. The duo break down 5 future-proof companies that will keep investors ahead of the pack through 2030.Advertisement
"His attention-getting, wild style is emblematic of just how emotional and extreme equity markets are now," Cecchini said in a LinkedIn post on Friday. "It's both impulsive and compulsive. His behavior really just explains everything."
On Tuesday, Portnoy uploaded a video in which he said he "killed" the legendary investor Warren Buffett with his recent day-trading success.Many amateur traders have been betting against the likes of Buffett, with the airline exchange-traded fund JETS seeing assets surge nearly 3,000% in three months, boosted by millennial day traders. Advertisement
Day traders are piling into Hertz, JCPenney, and other bankrupt companies despite the overwhelming odds that shareholders will be wiped out during bankruptcy proceedings.
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