Mario Gabelli on Robinhood, Warren Buffett, Fed Taper, Market Crash

On Oct 27, 2021

Mario Gabelli praised Robinhood and Warren Buffett in an interview with Insider.
The Gamco Investors boss warned of rising inflation, and economic disruption as stimulus ends.
Gabelli doesn’t expect a major market pullback for at least another year.

Mario Gabelli defended Robinhood, praised Warren Buffett, and warned the Federal Reserve’s tapering could disrupt the US economic recovery in an interview with Insider this week.

The billionaire founder and CEO of Gamco Investors also rang the inflation alarm, trumpeted blockchain technology, and predicted there won’t be a major market sell-off for at least another year.

Gabelli’s fund is probably best known for spending $1.3 million on Class A shares of Buffett’s Berkshire Hathaway in the mid-1980s. That stake is worth $95 million today — a roughly 7,000% gain.

The next frontier

Retail investing has boomed during the pandemic because of lockdowns and zero-commission, gamified trading platforms, Gabelli said.

“There’s a new generation of investors that were weaned on Fortnite and social media, and all of a sudden they can trade for free,” he told Insider. “They’re stuck at home and this is a new game.”

Several top investors have blasted Robinhood for encouraging users to make levered bets on securities they don’t understand. In contrast, Gabelli praised the trading app for educating its users and acting as a bulwark against socialism in the US.

“Robinhood is bringing individuals into the capital market,” he said. “Even though they may lose money, they start learning about allocation of capital and ownership of assets.”

Gabelli also touted blockchain’s potential to disrupt financial markets, noting it enables faster money flows and fee-free international transfers.

“Blockchain is very good and necessary,” he said. He called, however, for clearer regulation of bitcoin and other cryptocurrencies, as even using them to buy a cup of coffee can be classified as a taxable event.

Buffett hasn’t lost his touch

Gabelli dismissed recent criticism of Buffett, highlighting the performance of Berkshire’s stock portfolio and how the conglomerate has made over $100 billion on Apple stock in a few short years.

“You always think of Buffett as railroads, industrial America, insurance, and then you think about the digital revolution and you say this guy can’t understand it,” Gabelli said. “He pulled the trigger on Apple. You’ve got to give him credit.”

Buffett will deploy a chunk of Berkshire’s cash hoard when the right opportunity comes along, Gabelli said, pointing to the investor’s $10 billion financing deal with Occidental Petroleum in 2019 as an example. Berkshire’s recent deals with Snowflake and Nubank also signal a growing taste for private deals, making it a fee-free alternative to big acquirers like Blackstone and KKR, he continued.

Moreover, the fund manager told Insider that he will strongly…