According to Mark Cuban, Wall Street needs a new marketing slogan “to get suckers to the market”.
The old slogan used to be: “Buy and Hold”.
In the 60’s, the holding period for stocks was 8 years, in the 90s it 8 months.
Today, Mark Cuban reminds us, stocks are bought and sold in milliseconds.
According to Mark Cuban, Wall Street’s new mantra is “Asset Allocation” or “Diversification”, which can come in the form of all the different types of funds on the market, such as REITs (Real Estate Investment Trusts) and ETFs (Exchange Traded Funds).
According to the Billionaire, buying these diversified funds makes good business for Wall Street but not for you.
“Investment advisors want you invest in things you have absolutely no fricking clue about and have pretty much absolutely no fricking ability to learn about.
They want you to diversify into Emerging Markets, Commodities, International Bonds, Munis, Real Estate Investment Trusts, ….and.. well, a lot of different ‘stuff’.” – Mark Cuban
Cuban asks if you really want to “diversify” your money in funds that put your money into investments, you don’t understand, you’re broker doesn’t understand and you don’t have the time or inclination to learn.
“Will you have any clue about when to change your asset allocation ? Will you change it based on changes in the dollar ? Changes in domestic inflation ? Changes in European inflation ? Inflation in China ? Changes in tax laws in Italy and Greece ? Changes in interest rates ? Trade balances ?” - Mark Cuban
Cuban harkens to the advice of successful Billionaire investors Peter Lynch, who advises stock investors to “pay attention to what they see in the mall and elsewhere and use that as a source of ideas and information” and Warren Buffet who advocates looking for value in things we know.
When it comes down to it, Mark Cuban advises that you invest in something you know and not something Wall Street wants you to believe.
Source – Blog Maverick (Mark Cuban’s personal blog)