Ken Langone: The stock market is a 'casino' now — but there's still a way for individual investors to profit

  • Trading in the stock market nowadays is like gambling, says billionaire businessman and philanthropist Ken Langone.
  • "The only hope you have is to own great companies, put them away and don't look at the market," the 83-year-old advises.
  • "There's a disconnect between what used to be the yardstick by which you measure stocks," he warns.
Ken Langone
Anjali Sundaram | CNBC
Ken Langone

Trading in the stock market nowadays — ruled by exchange-traded funds, index funds, computer trading and information overload — is like gambling, billionaire businessman and philanthropist Ken Langone told CNBC on Wednesday.

"There's a disconnect between what used to be the yardstick by which you measure stocks: earnings, dividends and so forth. It's a casino out there. The only hope you have is to own great companies, put them away and don't look at the market," the 83-year-old Langone said in a "Squawk Box" interview.

The recent volatility in the market has certainly not been for the faint of heart. On Tuesday, the S&P 500 closed just above its 2018 low as stocks struggled to keep a rebound alive throughout the session. The index remained firmly in a correction, defined as a decline of 10 percent or more from the most recent high, even as it moved higher in early Wednesday trading.

"There are some great values out there. The thing you can't do, you don't have the luxury of being emotional about the market anymore because there are so many things that defy logic," Langone said. "If you go with a whim, you're going to get whipsawed at best. And at worst, you going to miss great opportunities."

Langone, the co-founder of Home Depot, said his longtime friend and legendary investor Stanley Druckenmiller alluded to this paradigm shift this week. "Stan was interviewed by Bloomberg, and he said one of the reasons he gave up was because it's a new game." Druckenmiller, 65, closed his Duquesne Capital Management hedge fund in 2010 after three decades, and turned it into a family office. In 2009, Druckenmiller gave $100 million to NYU Langone Health, a major medical center in New York.

In addition to chairing the board of trustees at the medical center that bears his name, Langone is also the founder and chief of investment bank Invemed Associates, with a specialty in health-care companies.

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