Buffett says speculative trading is making value harder to find

Warren Buffett said investors are facing a thinner set of bargains as speculative trading plays a larger role in U.S. equities, telling CNBC that “it’s tough to find values when everybody is preferring gambling.” His comments came as the stock market has reached record highs this year despite concerns that include an energy shock linked to the continuing war with Iran, according to CNBC.

Buffett, the 95-year-old chairman of Berkshire Hathaway, made the remarks in an interview with CNBC’s Becky Quick. CNBC reported that he criticized a market increasingly shaped by short-term trading rather than long-term ownership.

The Berkshire chief has long been associated with value investing, a discipline that seeks to buy businesses at prices below an investor’s assessment of their worth and to hold them through cycles. In the CNBC interview, Buffett said meaningful opportunities do not appear on a steady schedule and that investors sometimes have to wait.

“There are times when opportunities are just thrown at you so fast you can’t, you know, it’s unbelievable,” Buffett told CNBC. “And then there’s other times when you’re very, very lucky if you find one thing in a couple of years. And it should always be that the the latter is what prevails.”

Buffett also linked the change in market behavior to the commercial appeal of speculation. “But since humans love to gamble so much, there’s more money in in actually cultivating gamblers than there are cultivating investors,” he said, according to CNBC.

Speculation around options, leverage and AI

CNBC reported that skeptics of the rally have pointed to heavy speculation in companies connected to artificial intelligence infrastructure. The report cited trading vehicles such as options and leveraged exchange-traded funds as adding momentum to the move in stocks.

Options can be used to make short-term bets on share-price moves, while leveraged exchange-traded funds are designed to magnify the daily moves of an underlying index or asset. CNBC specifically noted Buffett’s earlier criticism of one-day options trading, which he described in May as “gambling.”

At Berkshire Hathaway’s annual meeting in May, Buffett compared the stock market to “a church with a casino attached,” CNBC reported. The phrase reflected his concern that capital markets continue to serve long-term investment purposes while also offering products that encourage rapid speculation.

Retail traders have also become a larger presence in equities, according to CNBC. The network cited buying interest in shares of memory-chip maker Micron and the recent IPO SpaceX as examples of stocks attracting individual investors.

Buffett did not say that attractive investments have disappeared. His argument, as reported by CNBC, was that the current market requires patience because periods rich in obvious bargains are unusual and often separated by long stretches in which opportunities are scarce.

This story draws on original reporting from CNBC.