Charlie Munger

 Charlie Munger: ‘High Frequency Trading is Basically Evil’

Berkshire Hathaway number two Charlie Munger says he believes the long-term investor is basically not affected by things like the flash crash. But high-frequency trading, he says, is really “legalized front running.”

Why Charlie Munger Thinks HFT Is ‘Basically Evil’

Charlie Munger, Berkshire Hathaway vice chairman, shares his insights on the markets, and explains why he thinks bankers “are like heroin addicts,’ and high frequency trading is “legalized front running,” with CNBC’s Becky Quick.


we’ll take a deeper look at the tech sector later in the show. meanwhile, a very rare interview, warren buffett’s right hand man, becky, we understand that he had some insights on trading and bankers. it’s great to see you. great show this morning. thank you, carl. it’s great to see you. you’re right. every year it seems charlie takes on one group or another. he always speaks freely and openly. this year is no exception. last year i think it was the gold traders he took on. the year before that it was the accountants. and he looked back to cyprus, what’s happened in europe, and he says this is a great example of bankers gone wild. cyprus demonstrates an old truth. you can’t trust bankers to govern themselves. a banker is allowed to borrow money at x and loan it out at x plus y. what happened in cyprus is very similar to what happened in iceland. it was stark raving mad in both cases. and the bankers, they would be doing even more if hay hadn’t blown up. i do not think you can trust bankers to control themselves. they’re line heroin addicts. he also targets the high frequency traders. monday is the two-year anniversary of the flash crash. when it comes to high frequency traders, that’s another story. a long-term investor is not with the crash. that’s sad. it’s very stupid to allow a system to evolve. people trying to get information. now ahead of somebody else. and it’s legalized front running. i don’t think it shoifb allowed to reach the size that it did. i now see people are starting to talk about cutting it back. we should we pay a group of people? a very good question. we talked to him about it. he admits you can’t put the genie back in the bottle with this. he said an ounce of cure is with a pound of prevention. charlie said ben franklin didn’t have it right. he said it’s worth 100 pounds of cure. it’s interesting to be sitting down with a long-term trader on a day when the markets finally pushed back to new highs with the dow above 15,000 and s&p above 1600. i asked him what he thought about that and the jobs number out there. he says he doesn’t pay a lot of attention to the markers on the way. he had awfully interesting long-term thoughts. we are going to talk about what he thinks about what the federal reserve is doing and how he looks at allen green span versus ben bernanke. i can’t describe to you what that reaction is getting on twitter right now. it’s hard to put into perspective. we know he has the reputation for being cantankerous. i’m wondering if you heard him say on bankers or trading, anything like what he told you today. it feels like he could say whatever he wants. i don’t think he thought about what he will keep on things. he has opinions out there ruffling feathers. it definitely sets the stage for the weekend. wrour yoing to have a lot of fun. you can’t miss that. we’ll talk to you soon. becky quick. here’s a look at the markets coming off the highs here.

Charlie Munger: ‘Bankers Are Like Heroin Addicts’

“You can’t trust bankers,” says Berkshire Hathaway’s Charlie Munger to CNBC’s Becky Quick.