So now I went ahead and read more on his site. There was a lot of information I actually liked so I came here to quote directly (though I am biased)

“Ive said it before, a stock that doesnt pay dividends is valued like a baseball card. Just whatever you can sell it for. ”

“The stockmarket used to be about investing capital in companies that came public or did secondary offerings. That money was used to create amazing businesses and return dividends back to people who truly were investors. There once was a day where most companies paid dividends higher than the interest rates on their bonds. Why ? Because stocks are inherently more risky. If a company goes belly up, bondholders collect first, shareholders usually last. People could buy and hold stocks, and get paid real cash money for being a shareholder in the company at rates far higher than the dividend yields we see today. If the company did well, the dividends went up. Investors who held, actually got all their money back in dividends at some point and the rest was gravy. The good ole days.”

http://blogmaverick.com/2008/09/08/talking-stocks-and-money/

Great discussion going over here y’all, love reading about all this stuff!

Also I just went back to read his original post on asset allocation and you’re totally right that he advocates against buy and hold specifically for the average investor. I didn’t remember him taking such a strong stance against asset allocation, so I guess I didn’t give my comment as much thought as I should have. My mistake.

In my mind, I always interpreted his comments from the pov of an entrepreneur, and I agree with the general idea that you should invest in things you know whenever possible. But I do agree with you that maybe for the average investor, asset allocation and index funds is a good thing and not a wall street trick.

I have actually given it a “tiny bit of thought” given that I’ve been reading Cuban’s blog since the 00s, but fair enough – I did hit reply to your comment and didn’t directly address the click bait, cherry-picked headlines you and Jack were referring to.

This is mass media, so take the “diversification of idiots” and “buy and hold is a crock of sh*t” quotes with a grain of salt. Marc Cuban is an opinionated guy and he has a tendency to give mass media the controversial sound-bites they LOVE, even when his actual thoughts are more nuanced.

Let’s look at what the context of what he says in the WSJ interview:

First of all, Cuban says “buy and hold is a crock of sh*t”, but the context is that he’s disagreeing with what everyone tells HIM he should do as an investor. He personally disagrees with the idea that you ALWAYS have to invest your cash in the market. He’d rather sleep at night and keep his money in cash most of the time, unless he feels he has an edge somewhere.

Later in the interview he circles back to this and acknowledges that this might only work for him because he doesn’t need to live off of his investing returns. For him, “buy and hold is a crock of sh*t” because it implies you always need to have cash in the market. But for Marc Cuban, the 2% he might lose to inflation seems to be less of a concern to him than having his networth fluctuate by 200-300 million during a correction.

It seems reasonable to me that Cuban with his resources has a different approach to investing than someone making 80k a year trying to retire in 10 years.

Then, Marc Cuban says specifically that the average investor these days SHOULDN’T be actively trading because they’re competing against huge hedge funds and algorithms that have all the edges. He says he’s been warning people against actively trading since the mid 00s.

Here’s another sound-bite WSJ could have used for the headline:

“There really aren’t advantages for the individual trader”

Funny that the WSJ didn’t pick this as a headline. Not controversial enough.

He includes himself as an “individual trader” and says unless he knows something specific, he will keep it in cash. He acknowledges that he’s in a different position than most people, because he’s not relying on investing returns to pay the bills.

He does go into some moves he’s made personally when he thinks he ha an edge, but even when pressed by the interviewer, he never suggests anyone else should try to copy him.

The interviewer gets tired of hearing about what Marc Cuban does, so he pushes Marc to tell him how “john and sally doe” should invest.

Here is Cuban’s actual, non-soundbite advice in the interview where he was quoted as saying “buy and hold is a crock of sh*t” and “diversification is for idiots”:

1. He says it really depends on how much money you have. He uses 50k cash as an example, and says this is what he would suggest:
2. First thing you should do is pay off all credit cards because it’s costing you 18%, but most don’t. He references the tremendous amount of credit card/student loan debt the US has.
3. Use the transactional value of cash. Basically keep lots of cash and buy stuff when it’s on sale and stock up because it’s a guaranteed return. It’s actually hilarious to hear Marc Cuban talking about stocking up on toothpaste like a Frugal mommy blogger on the WSJ.
4. He says you should concentrate on your budget and analyze your spending habits instead of worrying bout investing, since that’s a guaranteed return.

Basically, all the exact same stuff he wrote in his “how to get rich” blog post from years ago.

At this point, the interviewer is sick of all this boring, sensible personal finance stuff, and presses him on what he thinks the average investor should do with their money if they HAD to get a return.

But Marc Cuban disagrees with his premise that you need to get a return. He says he’d rather sleep well at night, but ACKNOWLEDGES that he’s in a different position than most where he doesn’t have to live off of the 1% return on cash.

So basically, Marc Cuban thinks the average investor should pay down debt and focus on personal finance instead of worrying about squeezing out a return in the market. He thinks the market is being abused by hedge funds and algorithmic trading.

When forced to give investing advice, he sidesteps the question and says what HE personally would do, which is hold his money in cash so he can “sleep” at night, and only invest in something where he thinks he has an edge.

I think that’s pretty important context to keep in mind when reading those 2 quotes you’re referencing.

Nate,

The comment from myself, from Bogle, and from others, relates to Mark Cuban promoting the idea of active short-term trading rather than having a diversified portfolio with minimal trading.

The comment had nothing to do with being an entrepreneur.

Perhaps if you had given the context of my comment at least a tiny little bit of thought, you would not have made your comment in the first place.

Hopefully you’re investing your money *somewhere* vs nowhere! It doesn’t have to be the markets, but holding on to cash in the long run loses money :( Though it does feel safer (and good to have a certain amount set aside for emergencies/daily living/etc)

He’s always talking about how he’s the luckiest mother f’er on Earth and taking advantage of it each day :)

People typically love him or hate him :) He’s pretty feisty and tends to say whatever’s on his mind, haha….

Yeah, I didn’t know that existed? Very cool