(The Street) Jim Cramer hit back at billionaire investor Warren Buffett's criticism of retail investor-focused trading apps such as Robinhood, calling it "patronizing and denigrating" and based on anecdotal evidence.
Buffett, speaking to his annual meeting with Berkshire Hathaway shareholders on Saturday, said trading apps like Robinhood "set out to attract" people who are more interested in gambling on stocks and financial assets rather than investing in them, citing figures that suggest more users trade short-term calls instead of using traditional 'buy-and-hold' strategies. His long-term colleague, 97-year old Charlie Munger, said such a business model was "God awful" and "deeply wrong'.
TheStreet's founder, Jim Cramer, however, told CNBC's Squawk on the Street program that attacks on retail investors, particularly the newer breed that has developed its influence through apps such as Robinhood and message boards such as Reddit's Wallstreetbets, are misguided.
"I think we need to encourage younger people to get into the market, and we need to help them when we do," Cramer said "If we're just going to sit here and tell people they should be in index funds, then I think we miss great opportunities for people."
"I've talked to thousands of investors, and probably a lot more than (Buffett and Munger) and I find (Buffett and Munger's criticism) denigrating and patronizing," he said. "I know you're not supposed to criticize these two gentlemen, I know they're supposed to be above criticism, but they directly attacked a wave of investing that I'm really excited about."
Last month, Robinhood said that around 9.5 million users traded cryptocurrencies over the first three months of the year, a six-fold increase from the first quarter of 2020.
"I think it's very easy to criticize this cohort as fools, but one of the most popular investments of late is to buy slivers of Bitcoin," Cramer noted. "Now, are they fools, or have they beaten everyone?"
Robinhood, the trading app whose parent company is likely to go public later this spring, said Monday that the "old guard that doesn't want average Americans to have a seat at the Wall Street table so they will resort to insults."
"The future is diverse, more educated and propelled by engaging technologies that have the power to equalize," Robinhood said.
