STEVE WYNN: The stock market has never been a more volatile and stupid 'gambling game'
This post has been updated to reflect that the comments came from the first-quarter earnings call in May.
Billionaire casino and hotel magnate Steve Wynn, the chairman and CEO of Wynn Resorts (WYNN), has described the stock market has become “more volatile, more stupid as a gambling game than ever before.”
During an earnings call with analysts and investors, Wynn went off on short-sellers, particularly the high-frequency traders.
This rant was prompted after Wynn was asked by JPMorgan analyst Joseph Greff about the board’s authorization of share repurchases.
“Can you talk about how you are thinking about buybacks right now and actually why did you up the authorization?” Greff asked, according to a first-quarter transcript posted by SeekingAlpha.
Wynn responded: “Well, we never know what the Street is going to do with the funky trading. And we all feel that, both as individuals and as a Company, that we should be prepared to take advantage of real opportunity when it occurs. And my Board feels that way and so do I. So we just wanted to make sure that we are properly armed in case there was something strange that happened on Wall Street and the stock market dropped or our stock went to a level that we thought was grossly oversold we would jump on it.”
He continued: “As long as the short players fool around for a buck or two that is fine. But when shorts – the exchanges really don’t enforce the rules of make it shorts. So it is an unconscionable manipulation of the stock that occurs. They open up every morning and the high-frequency traders and the shorts have a ball selling shares and then value buyers step in in the afternoon and they cover the shorts.”
He went on to call it “regular casino activity” that is “poorly regulated” and “irresponsibly policed.”
He said they see a lot of shorts because of China.
“And although I can’t do nothing about it myself I take advantage of it when it gets out of line and buy shares. I mean it is fine when they drive the stock down for reasons that are irrelevant and completely disconnected from anything to do with our business operations,” he said, adding, “So the stock market has got more volatile, more stupid as a gambling game than ever before. And I look at it that way to be honest with you. I have very little respect for the integrity of the trading on the exchange in most stocks. And I have particular disdain for the fact that the SEC has failed to deal with high-frequency traders who are doing nothing more than taking advantage of inside information, a buy or a sell order, because of technology advantages.”
He said that if he executes an order he’ll use IEX, the exchange founded by Brad Katsuyama, the hero of Michael Lewis’ “Flash Boys,” so he won’t “be fronted by the high-frequency traders.” He added that there’s still a lot of that going on and that he has no respect for the high-frequency traders’ activity.
“The other day I was watching the stock open up and it went up on share volumes of a few thousand shares. I mean every trade was a tick up. That is not the way it should operate in an honestly or intelligently run exchange, but that is the thing,” he said.
“All those guys sold their dark pools and their order flow and the positioning on the floors of the servers to the HFTs. And it has made a couple guys that I am friendly with very rich because they are high-frequency traders. But I don’t respect the activity. And I am severely critical of it and don’t mind saying so either.”
WYNN shares were down by 6% mid-day Friday.
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Julia La Roche is a finance reporter at Yahoo Finance.
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