Home > Uncategorized > Don’t Believe Everything a Billionaire Says…

Don’t Believe Everything a Billionaire Says…

Mark Cuban’s recent blog post, *CLICK HERE*, he says that the stock market is for suckers.  Implying that it’s gambling and that you are victims to Wall Street’s lies.  Mark’s thoughts on the stock market is a bunch of crap and full of lies.   I do agree with one point of  Mr. Cuban.  You are a sucker for blindly following financial advice without doing you’re own due diligence.    “The only person that cares more for your financial health is yourself.”

Before I get into the article let’s first lay down a foundation.  The majority of people tend to believe anything that a person says if that person holds a degree in that field, or has a butt load of money.  They instantly assume what they say is truth and don’t even do any research for themselves.  That’s just being lazy.  Remember back in the day when stock brokers told you to buy ABC stock b/c it had great fundamentals?  The average person still thinks stock brokers are involved with asset management decisions.  Remember a few years back when major economists and the federal reserve chairman said “that our economy is doing great b/c the housing market is growing”.  At the same time  a doctor named Ron Paul said that “It’s going to tank.”  The guy who can do your stitches called it, wow!   So many will believe something that is said as truth b/c they think, “oh well that person has an economics finance degree, or is gazillionaire … so they are the experts. I should do whatever they tell me to do with my money.  This is completely false.   The majority of people working on Wall Street have Ph.Ds in Mathematics,  Physics or some kind of hard science.

Now let’s think what is Mr. Cuban really up to.  If it weren’t for the stock market, Mr. Cuban wouldn’t be a billionaire.  So what is his incentive?  ah ha! Right?  He’s a sneaky little bastard.  M.C.  started a company called broadcast.com right before the tech bubble.  I know so many people, including college students, that became millionaires just buying crappy tech stocks back then.   A stock would be 0.25 cents and it rockets to a few dollars a share.  That’s bank!  The tech bubble was a result of greed and assets becoming overly valued exponentially beyond their book value.  Just like what happened to the housing market that was artificially inflated beyond reasonable value.  Now if you own one of the largest tech companies at that time and sold it at a price due to artificial inflation of course you’re going to be a billionaire.  If Mark’s company was created at a different time he wouldn’t be as rich.  He was in the right spot at the right time.  Mark is nowhere as innovative as the CEO’s of Google.  Mark got rich not by innovative skill.   Just like those who bought houses during the peak of the bubble and happen to sell.  It’s not like they knew CDO’s and derivatives were going to implode and so timed the market. ha!

Now To his Article:

  • Yes, “buy and hold” is a stupid concept pushed by the likes of Warren Buffet.  If you have money in a mutual fund or the stock market, then please pay attention to whats going on in the economy and pull it out if the poop starts to hit the fan. So the statement is really incomplete.  It should be, “Buy and hold and pay attention to whats going on in the world, your economy, your portfolio and Sell when poop starts to hit the fan.”
  • Yes it’s true that stocks are bought and sold in milliseconds.  They are done by investment banks, hedge funds and clearing firms.  They are acting as market makers and providing liquidity to investors.  Trades that happen in milliseconds have no effect to the longer term investor.  For example, when you buy a stock through your broker.  Like E-trade.   E-Trades uses it’s computers to scan all the venues for the best price and then sells it to you.  E-Trade makes money on the spread.
  • M.C. says Wall Street wants us to invest in things we don’t understand.  Well, then don’t do it.  Keep things simple.
  • M.C says, “to not invest in the stock market and keep your cash.”  Ok that is just stupid.  That’s worst than “buy and hold”.  Cash is an investment position!  The value of the U.S. currency is at historic lows and has been on this decline since the 1960’s.  It hasn’t gone up since then.  The stock market is vital to all expanding growing economies.  Foreign governments put their money in the stock market.  If you believe in a company then invest in it, but don’t just forget it.  Monitor it everyday.  We don’t drive cars with our eyes closed do we?  Ok maybe some women do in the morning while they are putting on their make up or texting. ha!

Mr. Cuban’s motive:

Is for his own self gain.  Let’s think about it.  He doesn’t want people to put money into the stock market, and he says to keep cash in the bank.  He says this because he doesn’t want other start-up companies to get investments to grow and development.  That would create more competition for him.  The stock market is needed for new companies to expand.  There would be no Apple or Google without the stock market.   He says to keep your money in the bank and not invest.  He says this b/c the U.S. dollar continues to decline, plus there’s inflation everywhere, and increasing capital gains to add on top of that.  All what he says is for his benefit, not yours.

Mark Cuban recently got charged with insider trading.  http://www.reuters.com/article/2010/09/21/us-sec-cuban-lawsuit-idUSTRE68K33E20100921

Mark owned shares of a new start-up company.  He then started pumping it up, by telling everyone about it on his blog and other media.  He knew the company had some news that would negatively effect it’s stock price and he dumped it.  Many people lost out while he made 750,000.  That’s nice pocket change for selling a bunch of lies.

In conclusion, doing  your own due diligence and homework will surely pay off.

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