Warren Buffett rips Wall Street for turning the stock market into ‘a gambling parlor'

Wall Street encouraged speculative behavior in the stock market, which turned it into a gambling parlor, according to Warren Buffet.

During his annual shareholder meeting Saturday, Warren Buffet spoke about his favorite targets for criticism: investment banks and brokerages.

Wall Street makes money by catching the crumbs that fall off the table of capitalism. They make more money when people gamble than when they invest.

Large American companies have become poker chips for market speculation. He said that call options make more money for brokers than simple investing.

He said that the situation can result in market dislocations that give the company an opportunity. In the first quarter, he said, he spent an incredible $41 billion on stocks. His stake in the oil producer rose to more than 14 percent after $7 billion of that went to buy shares.

Markets do crazy things, and occasionally,Buffett gets a chance to do something.

Charlie Munger, the long-time partner of Warren Buffet, said that it was almost a mania of speculation.

Munger said that there are people who know nothing about stocks being advised by stock brokers. I don't think any country would want this outcome. Why would you want your country's stock to be traded on a casino?

The stock market was flooded with retail traders. The frenzy was fueled by trading from the message boards. The stock market has turned this year, putting many new at- home traders in the red. The Nasdaq is in a bear market, down more than 23% from its high after an April crush.

Warren Buffet has a long history of deriding investment bankers and their institutions, saying that they encourage mergers and spinoffs to reap fees rather than improve companies.

He shuns investment bankers for his acquisitions, calling them "money shufflers", and his $848.02 per share offer for Alleghany excludes Goldman's advisory fee.

He noted earlier in the session that the cash-rich company would be better off than the banks in times of need. An audience member made an inaudible comment.

Was that a person screaming?

You can follow along with live updates and a live feed of the meeting here.