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January 08, 2006

Investment Advice From Mark Cuban

I love Mark Cuban. I didn't want to like him. When he first bought the Dallas Mavericks I thought "Ugh!" Here is some young punk who got lucky, made a billion dollars in the Internet bubble that he probably doesn't deserve, and has bought the Mavericks to show everyone that he can.

 

Then I heard him speak. He was phenomenal. No airs. No bull. Just straight from the hip. I realized in that 90 minutes that, while he may have been in the right place at the right time, there was serious business acumen behind the bad boy image.

 

I left that program with a tremendous amount of admiration. That admiration has only grown as I have watched him over the years. As businesspeople, we share many of the same values. Truth-telling, putting the customers best interest ahead of your own, being accessible, and having fun with it.

 

Everyone wants to know what you have to say about the stock market when you are a billionaire. Mark Cuban gives us his investment advice for 2006, which is, not coincidentally, right in line with my own. Here are a few choice excerpts:

 

Every year at this time, everyone and anyone who has a vested interest in selling stocks comes out and talks about how great a year its going to be in the stock market.  Of course its all nonsense and bullshit. NO ONE knows what the market is going to do. Not timers. Not technical charts. Not economists, Not brokerage Heads of Research, Not stock pickers. No one.

 

[ … ]

 

According to an ad for one family of mutual funds, there are 17,000 mutual funds on the market for purchase.  How amazing is that ? How in the world can there be 17,000 fund managers that are worth a damn ? There cant be. How many are good ? How many suck ? How many of the funds will close every year taking your money with them ? Are you completely confident in the fund that is taking money from your paycheck every 2 weeks ?

 

Then of course there are the brokerages. I swear that there are few things that turn my stomach on TV more than watching commercials for brokerages. The guy who gives the toast at the wedding, Paul McCartney, the guy from Law & Order, all trying to con people into thinking that any of their stockbrokers can take you to a financial promised land.

 

[ … ]

 

Simple, avoid risk.

 

Risk is what Wall Street lies about every day. Risk is what they try to sweep under the covers knowing that we all are addicted to the dream of financial freedom. Risk is the poison that is masked by the commercials.

 

[ … ]

 

You can however make the personal decision to avoid risk. Avoiding risk allows you to sleep at night. Avoiding risk allows you to have more at the end of the year than when you started.

 

Lots of people spent a lot of money on commissions this year. If you put your money in the bank, in a CD or in treasuries, you not only slept better than them, there is a very, very good chance you kicked their ass in total return. Your interest compounded, they probably paid interest on their investments.

 

I get emails every day asking me where people should invest. I tell them all the same thing, and I will say it here. Put your money in interest earning investments.

 

Amen Mark! What he is saying is you should avoid risk and put your money in something that provides a consistent payment or paycheck. You know I agree although I know a place where I can get significantly better interest than treasuries with only slightly more risk. The full text of Cuban's post is on his blog, Blog Maverick, and is worth the read.

 

Kim Snider, Kim Snider Financial Communications, Chronim Investments and/or Snider Advisors make no representation that the information and opinions expressed are accurate, complete or current. The opinions expressed should not be construed as financial, legal, tax, or other advice and are provided for informational purposes only. Call 866-952-0100 to request the Snider Investment Method™ Owner's Manual, which includes a description of the Snider Investment Method, investment objectives, risks, suitability and other information. Please read and consider carefully before investing. All investments are subject to risk including possible loss of principal.

 

Posted by Kim Snider on January 08, 2006 | Permalink

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