(Business Insider) 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.
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."
Markets have largely rallied since touching lows on March 23, with many commentators highlighting that different day traders, also known as mom-and-pop traders, have contributed to this. Experts have been divided on whether to praise the surge in inexperienced investors or blame them for falsely inflating stock valuations.
A Monday note by Societe Generale said Robinhood traders displayed top-notch timing when they rushed to the market as it hit recent lows.
"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.
"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.
Day traders are piling into Hertz, JCPenney, and other bankrupt companies despite the overwhelming odds that shareholders will be wiped out during bankruptcy proceedings.
Before Hertz's bankruptcy filing on May 22, about 43,000 Robinhood accounts owned shares of Hertz. That number nearly doubled to 73,000 in the first week of June.
