"The Stock Market is for suckers…." - Mark Cuban

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Gekko
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"The Stock Market is for suckers…." - Mark Cuban

Post by Gekko »

he makes some interesting arguments. of course, i disagree with his conclusion and have 60% of my net worth in stocks.

-----

The Stock Market is for suckers….

Jan 3rd 2006 11:25AM

http://blogmaverick.com/2006/01/03/the- ... r-suckers/
Last edited by Gekko on Sun Oct 19, 2008 9:20 am, edited 2 times in total.
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Cosmo
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Post by Cosmo »

Mark Cuban is a smart guy and I respect what he has to say. There seems to be a growing number of news articles and blogs out there questioning if the stock market is even the place to invest anymore. We aren't quite there yet, but this is a strong growing signal that we are approaching one of those once in a lifetime events where you should be panic buying at these historically low prices. To be sure, I'll wait for Money and Kiplingers to come out with an article about how "this time its different" and "for the first time in history, bonds are more prudent" before I go "all in".

Cosmo
Hemispheres
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Post by Hemispheres »

He should know plenty about ponzi schemes and inflated stock values ... considering he used the stock market to rip off yahoo.com when it bought his (almost) worthless company for billions of dollars.
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Post by linenfort »

There seems to be a growing number of news articles and blogs out there questioning if the stock market is even the place to invest anymore
And the questioners will come back every time the market drops
like this. I can't imagine too many people were excited about stocks
in 1933, but those of us who had the wisdom to ignore the daily news
probably did pretty well for themselves.
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Gekko
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Post by Gekko »

some more current posts -

I’m Still Going Long and Hoping the Markets Go Down

Oct 10th 2008 11:19AM

http://blogmaverick.com/2008/10/10/im-s ... s-go-down/

-----

I’m Going Long Right Now

Oct 8th 2008 1:06PM

http://blogmaverick.com/2008/10/08/im-g ... right-now/
superlight
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Post by superlight »

FWIW, a lot of people here and elsewhere called "capitulation" early. Real capitulation is like this, when it becomes common wisdom across the media that the stock market is to be avoided.

... not that I think we are quite there, yet.
"Simplicity is the ultimate sophistication."
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Post by dave.d »

"for the first time in history, bonds are more prudent"
If you look at corporate, muni, and TIPS yields, the arithmetic is in fact pretty good right now compared to U.S. stocks.
Value-based allocation.
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Cosmo
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Post by Cosmo »

superlight wrote:FWIW, a lot of people here and elsewhere called "capitulation" early. Real capitulation is like this, when it becomes common wisdom across the media that the stock market is to be avoided.

... not that I think we are quite there, yet.
After the stock market crash in 1929, the real market capitulaton did not occur until three years later.
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Post by bullie1976 »

superlight wrote:FWIW, a lot of people here and elsewhere called "capitulation" early. Real capitulation is like this, when it becomes common wisdom across the media that the stock market is to be avoided.

... not that I think we are quite there, yet.
How do you have further capitulation when people like Warren Buffet says he is buying stocks now. He does say he doesn't know if this is the bottom but you now have talking heads quoting him and others following his advice.

I hope this is pretty much the bottom. :?
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Post by superlight »

bullie1976 wrote:How do you have further capitulation when people like Warren Buffet says he is buying stocks now. He does say he doesn't know if this is the bottom but you now have talking heads quoting him and others following his advice.
LOL, I hope we don't have to wait for Warren Buffet to quit the stock market.
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Met Income
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Post by Met Income »

superlight wrote:
bullie1976 wrote:How do you have further capitulation when people like Warren Buffet says he is buying stocks now. He does say he doesn't know if this is the bottom but you now have talking heads quoting him and others following his advice.
LOL, I hope we don't have to wait for Warren Buffet to quit the stock market.
SNL last night: "This is no time to panic as long as you're the richest man on earth."
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Post by yobria »

Many great entrepreuneurs are abosolute idiots when it comes to financial investing, from Rockefeller on down. Cuban proves his stupidity on about a dozen levels in that piece, from having to ask how to pick index funds, to saying he can beat the market picking stocks "when he tries".

That's ok Mark, you can't be good at everything.

Nick
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DA
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Re: "The Stock Market is for suckers…." - Mark C

Post by DA »

Gekko wrote:The Stock Market is for suckers….

Jan 3rd 2006 11:25AM

http://blogmaverick.com/2006/01/03/the- ... r-suckers/
I think this guy's ego may be bigger than his net worth.
cdelena
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Post by cdelena »

Cosmo wrote:Mark Cuban is a smart guy and I respect what he has to say.
...
Mark may be smart but got lucky so that does not mean his opinion is worth any more than yours...

Many of us worked with or did business with Mark in the years before his hobby turned into a tremendously overvalued small business. He was just a working stiff that liked technology and peddled services forty hours a week.

I have an uncle who was a very lucky guy that turned interest of horse racing into a fortune. I consider his opinion on par with Mark's when it comes to investing.
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Post by Index Fan »

Smart people telling you after the fact what to do? OK.
"Optimum est pati quod emendare non possis." | -Seneca
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lucky7
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It sure feels that way now.

Post by lucky7 »

It sure feels that way now. If want to be depressed compare on Big Charts or Morningstar 10 year performance/growth of S&P 500 vs. Long Term Treasury Bond Fund VUSTX. However, probably this pessimism good news now going forward for next 10 years.

Bob

P.S. I wonder how Warren Buffet would respond to the opening post.
Scotty, beam me up.
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Cosmo
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Post by Cosmo »

dave.d wrote:
"for the first time in history, bonds are more prudent"
If you look at corporate, muni, and TIPS yields, the arithmetic is in fact pretty good right now compared to U.S. stocks.
EXACTLY. You are helping to prove my point. :-)
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Post by Harold »

bullie1976 wrote:
superlight wrote:FWIW, a lot of people here and elsewhere called "capitulation" early. Real capitulation is like this, when it becomes common wisdom across the media that the stock market is to be avoided.

... not that I think we are quite there, yet.
How do you have further capitulation when people like Warren Buffet says he is buying stocks now. He does say he doesn't know if this is the bottom but you now have talking heads quoting him and others following his advice.

I hope this is pretty much the bottom. :?
There are plenty of downturns where prices rise without everyone having thrown in the towel. I imagine that's a little of what Buffett's seeing here. Prices may or may not go lower, but they're a good price for what he's buying (and he's not gambling on short term stock price fluctuations).

I don't think we're anywhere near the total capitulation ("death of equities", etc.) point. But we may not reach that point anyway.
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For Suckers. -- Fiction or Fact?

Post by Taylor Larimore »

Bogleheads:

"The Stock Market is for Suckers."

This is one of the worst and most misleading articles I have read.

I just finished reading a wonderful article about Jack Bogle posted by Mel which contained this fact:

"Had you put $10,000 in Vanguard's S&P 500 index fund when it set sail on Aug. 31, 1976, your nest egg would have been worth $281,500 on Sept. 30."


Mark Cuban should be ashamed.

Best wishes
Taylor
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Post by JohnDoe2004 »

Mark Cuban is a lucky fool. Reminds me of an acquaintance of mine who was high up at a fiber optics company and somehow managed to cash out all her options near the peak in 2000, netting hundreds of millions. If she had waiting a few months more I believe the stock went from 90 dollars to about 20 cents.
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Post by Gekko »

JohnDoe2004 wrote:Mark Cuban is a lucky fool. Reminds me of an acquaintance of mine who was high up at a fiber optics company and somehow managed to cash out all her options near the peak in 2000, netting hundreds of millions. If she had waiting a few months more I believe the stock went from 90 dollars to about 20 cents.
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Post by am »

"Had you put $10,000 in Vanguard's S&P 500 index fund when it set sail on Aug. 31, 1976, your nest egg would have been worth $281,500 on Sept. 30."

Wonder how many people actually achieved that? Through all the ups and downs without pulling their money and staying the course. Bet very few people. Yes the market offers a great return, but if few can achieve it then what is the point?
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Post by Imperabo »

"Yes the market offers a great return, but if few can achieve it then what is the point?"

Anyone can achieve really good returns from stocks. It just requires ignoring Mark Cuban.
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Post by am »

"Anyone can achieve really good returns from stocks. It just requires ignoring Mark Cuban."

Like I said and literature shows that relatively few achieve the quoted stock returns. Maybe cash is the answer for many people since it will lead to less anxiety and perhaps similar to slightly lower returns.
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Post by PatrickS »

JohnDoe2004 wrote:Mark Cuban is a lucky fool. Reminds me of an acquaintance of mine who was high up at a fiber optics company and somehow managed to cash out all her options near the peak in 2000, netting hundreds of millions. If she had waiting a few months more I believe the stock went from 90 dollars to about 20 cents.
Sounds like a good friend of mine. He cashed out a sizable chunk of his stock options not only on the best day (1st trading day of 2000 I believe) but he also got close to the intra-day high, which was around 10% higher than the close. Then he went into real estate and almost doubled his net worth in five years. Cashed out a sizable chunk of his real estate holdings in 2006 and went into a (fairly diversified) portfolio that I recommended. He read a couple of chapters of "The Four Pillars" that I had given him. He recently liquidated his mutual fund portfolio and was out for most of the big drop and got back in on Friday Oct. 10th.

We started out 2000 with very similar net worth. Although he timed the sale of his options much better than I did, I had more options and more income (more time with the company and a higher position). It's getting hard to make any arguments for my (Boglehead) philosophy with him and other friends in the face of this.

So I tell him and others that I have no doubt that my investment strategy will work out better in the long term. However, it will most likely require more time than our remaining lifetimes. His net worth is now about 3x mine :oops:

I'm not disparaging the Boglehead philosophy, nor do I plan to change anything other than to re-balance (as I recently did). It's just that of the three people I regularly discuss investing with, two of them are beating the pants off of the Boglehead method just by using what they can only call "gut instinct." The other is a typical buy high, panic and sell low investor. I also bought the Four Pillars book for him and over the course of the last few months, convinced him to get back into the market in a diversified portfolio. He finally took my advice and got back in... just in time for the big downturn. He managed to take my bad advice and make it even worse by buying only the equity portion of the portfolio I recommended. He tells me he feels like punching me every time he sees me now. At least he hasn't turned around and sold out low though.

I certainly haven't lost faith in the EMH or the Boglehead philosophy but I will never again give financial advice to any friends or family.
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Post by Imperabo »

Like I said and literature shows that relatively few achieve the quoted stock returns.

Like I said, that's because they listened to Mark Cuban. In all his incarnations.
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Post by SoonerSunDevil »

Hemispheres wrote:He should know plenty about ponzi schemes and inflated stock values ... considering he used the stock market to rip off yahoo.com when it bought his (almost) worthless company for billions of dollars.
Why are you blaming Cuban for Yahoo!'s stupidity? Cuban, quite shrewdly, set up collars on his Yahoo! stock he received for selling broadcast.com

Cuban is no fool. You may not like his personality, his investment advice, etc., but the man is brilliant in many respects.
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Post by DRiP Guy »

am wrote:Wonder how many people actually achieved that? Through all the ups and downs without pulling their money and staying the course. Bet very few people. Yes the market offers a great return, but if few can achieve it then what is the point?
The point is that achieving the result was POSSIBLE but few chose the path that led there.

What one does with that information is up to them.
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Post by Sam2 »

It's easy to be smart with inside information. Remember Mike Milken and Ivan Boesky? Jail made them even smarter.

Sam
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Re: For Suckers. -- Fiction or Fact?

Post by Gregory »

Taylor Larimore wrote:Bogleheads:

"The Stock Market is for Suckers."

This is one of the worst and most misleading articles I have read.

I just finished reading a wonderful article about Jack Bogle posted by Mel which contained this fact:

"Had you put $10,000 in Vanguard's S&P 500 index fund when it set sail on Aug. 31, 1976, your nest egg would have been worth $281,500 on Sept. 30."


Mark Cuban should be ashamed.

Best wishes,

Taylor
Unfortunately, if you'd put $10K into VFINX 10 years ago it would be worth $9,731 today. http://tinyurl.com/6x9c88
Timing is everything :D
Pecuniae imperare oportet, non servire. | Fortuna vitrea est; tum cum splendit frangitur. -Syrus
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Post by DRiP Guy »

SoonerSunDevil wrote: Cuban is no fool.
If the Post article is accurate, then we may have to agree to disagree on this one! :lol:
According to court documents, on June 28, 2004, then-Mamma.com CEO Guy Faure sent Cuban a message, titled "Call me pls." In the e-mail, CEO told Cuban to call him "ASAP." Cuban phoned Faure minutes later from the American Airlines Center in Dallas and spoke to Faure for 8-1/2 minutes.

In the conversation they allegedly discussed confidential information about the PIPE offering. At the end of the conversation, Cuban told Faure: "Well, now I'm screwed. I can't sell."

(Faure then wrote to other Mamma.com board members that "as anticipated (Cuban) initially 'flew off the handle.'")

After calling a sales representative to ask about the offering's details, Cuban called his Dallas broker and told him to sell his entire stake in the company, saying: "Sell what you can tonight and just get me out the next day."
http://voices.washingtonpost.com/washin ... v=rss_blog
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Post by woof755 »

Cuban is accustomed to being fined, but this one, if true, is going to sting.

The Mavs don't wear stripes, but he's rumored to be interested in buying the Chicago Cubs, who do.

But theirs are vertical.
"By singing in harmony from the same page of the same investing hymnal, the Diehards drown out market noise." | | --Jason Zweig, quoted in The Bogleheads' Guide to Investing
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Post by danwalk »

My favorite line from the initially cited Cuban blog post in 2006:
If you are going to trade stocks, you just have to follow one rule and remember one thing. That rule is always have a definite knowledge advantage about the company you are trading, and always remember that every stock transaction has a sucker, and you have to know whether its you or the person on the other side of the trade.
Always have a definite knowledge advantage. Check.

Always remember that every stock transaction has a sucker. Check.

Always know whether said sucker is you or the person on the other side of the trade. Oops, missed that one.

I wonder if they have NBA TV in prison?

Cheers,
Dan
Image | "Time is your friend; impulse is your enemy."—Jack Bogle
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Post by dmcmahon »

PatrickS wrote:
Sounds like a good friend of mine. He cashed out a sizable chunk of his stock options not only on the best day (1st trading day of 2000 I believe) but he also got close to the intra-day high, which was around 10% higher than the close. Then he went into real estate and almost doubled his net worth in five years. Cashed out a sizable chunk of his real estate holdings in 2006 and went into a (fairly diversified) portfolio that I recommended. He read a couple of chapters of "The Four Pillars" that I had given him. He recently liquidated his mutual fund portfolio and was out for most of the big drop and got back in on Friday Oct. 10th.
Many of my friends are now thinking that all types of investment are just gambles with big hedge funds pushing markets around the way the old Greek gods used to cause things like the weather. The only way to make money investing is to figure out where the next bubble is and ride it, then get out and into the next one, etc. I'm surprised your friend didn't bet big on commodities in 2006, then he'd be 4 for 4 this century.
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Post by Sonoran »

FWIW, a lot of people here and elsewhere called "capitulation" early.

Yep, that would be me.
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Post by justaworker2 »

Maybe Mark Cuban would like to "Redact" his remarks.
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Post by ziggy29 »

If I had Mark Cuban's wealth, I doubt I'd have much money in stocks at all. I wouldn't *need* the growth.
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Post by redbeard »

justaworker2 wrote:Maybe Mark Cuban would like to "Redact" his remarks.
Yes, I would think so. From what I understand, he isn't disputing that he received non public information on Mamma.com and then traded in order to benefit from it. His defense seems to be that the executive who told him the information didn't tell him that insider trading was illegal. This blog, and another one I saw where he states that he sold the stock in question because he learned they were looking to do the special equity deal, would seem likely to be titled "Exhibit A" and "Exhibit B" in the near future. Perhaps he could make things even worse though by attempting to destroy these blogs...
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Post by Unormal »

PatrickS wrote:So I tell him and others that I have no doubt that my investment strategy will work out better in the long term. However, it will most likely require more time than our remaining lifetimes. His net worth is now about 3x mine :oops:
The boglehead philosophy dosen't beat all strategies all of the time, just many of them, most of the time. There's still a significant amount of people who whip the average market return, you just can't predict who they will be going foward.

I think the ease of making money by riding the 'next bubble' is so obvious now, that it's likely not to work so great going forward.
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Post by msi »

Read the chapter from Bogle's "The Little Book of Common Sense Investing" called "When the Good Times No Longer Roll" starting on page 68.

He quite clearly says he doesn't expect the returns going forward to be as good as they were in the past, just simply asserting that index funds are still a better investment than actively managed funds.
"Had you put $10,000 in Vanguard's S&P 500 index fund when it set sail on Aug. 31, 1976, your nest egg would have been worth $281,500 on Sept. 30."
I don't know if it's ok to quote directly from a copyrighted book on here, but I have it in front of me and to loosely paraphrase he says, "I must warn you that during the past 25 years, the 12.5 percent nominal annual return provided by the US stock market included a speculative return of nearly 3 percent per year, far above the business reality." The rest of the chapter is then dedicated to why you can't expect the returns of the past century- particularly the past 25 years- to be the realistic going forward. He goes into the lower dividend yields, the P/E based on operating earnings, and then makes some guesses.

His point, though, is that index funds would still be the best investment, just that you can't expect the same returns going forward.
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Post by DRiP Guy »

msi wrote:I don't know if it's ok to quote directly from a copyrighted book on here
Occasionally these simple guidelines bear repeating as a summary and a link.
Section 107 contains a list of the various purposes for which the reproduction of a particular work may be considered “fair,” such as criticism, comment, news reporting, teaching, scholarship, and research. Section 107 also sets out four factors to be considered in determining whether or not a particular use is fair:

1. the purpose and character of the use, including whether such use is of commercial nature or is for nonprofit educational purposes;
2. the nature of the copyrighted work;
3. amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
4. the effect of the use upon the potential market for or value of the copyrighted work.
http://www.copyright.gov/fls/fl102.html
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Post by Karamatsu »

Interesting blog article. I have no idea who Mark Cuban is, but I think his take on the stock market (minus the self-aggrandizing bits) is largely accurate. I especially like the last two points he makes in the previous article (referenced, but not linked):

http://blogmaverick.com/2006/01/02/my-i ... -for-2006/

It reminds me of some advice I received very early in my career, which was that if I had less than $100,000 to invest, I should invest it in myself. Better yield.
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