- What's up Believe Nation?
I started the Mentor Me series with the goal
to try to hang your own people a little bit longer
who've done more than us.
And by staying with them and learning from them,
hopefully some of their strategies,
their wisdom, their mindset, seeps into us
to help us become the best version of ourselves.
So today we're going to learn from Mark Cuban
on his investing strategies.
Mentor me Mark.
Also as always guys, as you're watching,
if Mark says something that really resonates with you,
please leave it down the comments below.
Put quotes around it as well
so other people can be inspired.
And when you write it down,
it's more likely to lock in for yourself as well.
Enjoy.
(inspiring opening music)
- What if I offered you $1.25 million
to sell the whole company?
- Mark, you're saying screw the other sharks.
- Yup.
I like what you guys are doing.
I want you to come back to me with a percentage.
I don't want you to even talk to these guys.
- You're asking him to take that option with you right now
and ignore us?
You're not a very nice guy.
- It's not about me being wonderful.
- No, no, I have that title, thank you.
- It's about making a business decision, right?
- Hi, I'm Mark Cuban.
I'm a bully, look at me.
- What's that about, Mark?
- Like I said guys, you got to pay to play.
- There's tension in this room, I can feel it.
- It's offensive.
- You got a shot here, right?
Don't let these guys drag you down.
- Are you really interested in this?
- I like the idea.
- You really think cooking bacon bedside is a good idea?
- I love your passion, I love your knowledge.
- I'm waiting for the but.
- Yeah, there's a but coming.
- You've got a 24-second shot clock, $750,000.
- I've never seen greed like that.
That's unbelievable greed.
- You broke up with your potential partner
without even looking at him.
- You're a savage.
- I'm just a lean mean shark machine, baby.
If I say yes to whatever your counter is,
you have to tell me that you will say yes immediately
and we have a deal.
- $100,000.
- Now wait a minute.
- For 20% equity.
- Done, done and done.
- Crap.
- you like that, Barbara?
- I don't like it one bit.
That was so damn smart.
- No, but that's a compliment to you.
- Barbara, I screwed you, but it's a compliment to you.
- I feel really good about it.
- This isn't the rose garden.
It's the shark tank and you know what,
sometimes you got to take the bite
and sometimes you're the chum.
- So what is it that you're really looking for, Mark,
when you choose to say I'm in, I'm going to make you an offer?
- I really don't have any one thing.
I try to be objective about each company,
but I guess I look for something that's differentiated.
I look for something that's timely.
I look for somebody who I think can run the company,
that's committed to it.
I look for someone who does their homework.
And I look to see if I can add value to it.
Is it something that works for me?
Because if it's something, the frozen food business,
what big chefs are seeing--
- Not your thing, not your area of connections?
- You know what, it's not so much connections.
It's more okay, it means I'm going to have to put in the time
to work at this
because otherwise it's not fair to the entrepreneur
and do I have the time?
And that time, and you hear me say it over and over again,
time is my biggest constraint.
It's more valuable to me than money.
It's the one thing you can't get back.
And look, I'm not here to tell you
that time has always been my most valuable asset.
When I was sleeping on the floor,
I had plenty of time, right?
As you get older, I think more than anything else,
and as you have a family,
time becomes your most valuable asset
and that as much as anything else
impacts the investments I make.
- The markets have been going through these wild gyrations.
- Right.
- Don't seem to have a clear sense of what direction is up.
How do you interpret that as somebody
who's spent a lot of time playing in the markets?
- Well, put on my manage a portfolio trader hat,
and not so much a trader but manage a portfolio, it's great.
Anytime there's volatility and anytime there's change,
there's opportunity.
Now I say it's great
because I've taken a whole different approach to investing
than most people.
I think buy and hold is a crock of (bleep).
I think the idea that you always have to invest your cash
is not far behind.
And so I've always been of the attitude that
unless you really have a commitment to something,
just keep your money and cash
knowing that at some point in time,
there's going to be a week or two like we've had.
- But how much time,
I mean you've got a lot going on in your life,
how much time do you have to actively manage your portfolio
for these 500 point market swings?
- Well see that's the whole thing.
I don't have to spend much time
until it hits the fan, right?
- A lot are hitting the fan this week.
- That's exactly right and that's where the opportunity is.
I won't look at my portfolio
or I get a one-line, one-number statement everyday
from my bank and that tells me if anything weird happened
and I won't even look at it,
but then when everything starts getting crazy,
I call it the world series of investing,
that's when you start digging in
and it's because of the approach that I take.
So back in 2006 and 2007, I was writing blogs saying,
"Look, the stock market is for suckers."
When you sit down at the business table,
you always look for the sucker.
And if you don't see it, it's you.
And you've got all these professional people
on the other side of the trades.
When I started trading stocks in the early '90s
after I sold my first company,
you could understand different elements of the market better
than the professionals.
So I can understand new technology
from Wellfleet and SynOptics
and all these old technology companies
better than the traders.
Today, there's so much money in these huge hedge funds
and they have such professional research
and in-depth research,
there really aren't any advantages
for the individual traders
and so my approach has always been
unless I know something specific, put it in cash.
- And so what you investing in?
What are the areas that you feel you know?
- In 2008 and 2009,
I put everything into MLPs and Emirates,
mortgage back security,
the ones that I thought were the better companies
and I just piled in.
And I also piled into Australian bonds
because I thought the economy was good next to China.
It was my way of playing China.
- So you make one-way bets.
This isn't portfolio balancing you're talking about.
- No, all that asset management, diversification,
that's for idiots, right,
because you can't diversify enough
to know what you're doing.
What I did was I said,
"Self, there's going to be a lot of volatility."
So I took a little bit of money
and bought out of the money calls on the spider calls.
I bought Standards & Poor's, the S&P 500,
and I did the same thing on the diamonds
which is the Dow Jones so I bought those along
when the stock price was cratered
and then when we had the big, not today,
but the big run up before, I bought a bunch of puts
knowing that even though I was paying
for a lot of volatility
that I thought there would be a lot of swings in the market.
- So you're just spending on volatility.
- I'm just betting on volatility.
- And how long is that going to last in your view?
- No idea and that's the whole thing, right?
People aren't buying intrinsic value in companies anymore.
The whole Warren Buffett approach works great for Warren
because he can put $3 billion into an investment
and take a whole different approach
than a John or Sally Doe investor who can't do that.
- So you say buy and hold is a crock of something,
I can't remember exactly,
and you said the portfolio balancing is a waste of time
so what are John and Sally Doe supposed to do?
- It depends on how much money you have, right?
So the best way to get a return,
let's just say you have $50,000 in cash.
It could be 10, it could be 100, but let's use 50.
The first thing I would do is pay off all your credit cards
'cause that's costing you 18%.
That's what John and Sally should do first,
most don't, right?
There's more credit card than student loan debt
relative to personal income than there's even been
in the history of the United States.
The second thing you do
is you use the transactional value of cash.
A lot of people say, "You're losing money to inflation
"when you just have cash in the bank."
I completely disagree.
I know I'm buying a bunch of toothpaste for my family.
I know toilet paper.
I know all the consumables that I have.
I can take my cash and go get a better value.
I can take my cash and go buy--
- You store up?
- Yeah, yeah, why not?
How much space does toothpaste take?
But that's the whole thing.
The time it takes just to figure out your budget,
which nobody does,
the time it takes just to analyze your spending habits,
you can get a better return
and you'll end up with more cash
than trying to fight the John Paulsons of the world
and these guys who have hundreds of analysts
who are working for them.
Why would you try to do better than them?
You can't. - You can't win.
You can't and now it's 100 times worse
because of all the program trading.
- But if you have enough money
that you have to put some of it somewhere,
to park some of it somewhere
and hope to make a return on it,
where do you put it?
- What I do?
I don't think you have to make a return on it
because I'd rather sleep well at night.
I put it in cash literally.
Now obviously I'm in a different position
where I don't have to live off of the interest paying me
one basis point off of cash, right?
But at the same time, having that dry powder, if you will,
available when weeks like today or weeks like this week hit
and days like yesterday and today happen--
- And you see an opportunity.
- And you see an opportunity then you're ready to take it
as opposed to saying, "I can't get out.
"What am I going to do?"
And I'll tell you the other part that's better,
you're going to cut your health cost
because you're going to sleep a whole lot better at night.
- Do you sleep well?
- I sleep like a baby.
Don't use credit cards.
Of all the investments you'll ever make,
paying 19% or 18% on something is easily the dumbest.
That's money that you should be keeping, you can be saving.
It's a different world now
because you can be a smart consumer.
You have the ability to price check anything on Amazon
or Walmart.com and you know what you need to save for
or put it on law away with them now.
It ended up I had so many credit cards cut up.
I was cleaning up some stuff and saw my old credit report.
Sears, AMX, Visa.
The situation I was in was like
anybody who would give me a credit card I would use
because I didn't have any money so I needed to use it.
Literally, someone's flipping the old chunks
of my old credit cards somewhere.
Stay away from credit.
If you have a 401(k) match
and you don't do it
for as much as you can possibly force yourself to do,
you're an idiot.
If you don't have a 401(k)
then there's so many esoteric dumb ass banking rules, right,
where you can't just put $10 or $20 into the bank
because of all the service fees,
they're going to crush you, right?
And so there's a variety of new things
and opportunities that are coming up
where if you can get yourself to put in $10 a week,
$20 a week, $100 a month,
if you're 21 and you put in $100 a month
and you put it into a Vanguard Index Fund let's say,
hopefully you'll be able to increase those amounts
and so literally if you can train yourself
to save 100 bucks a month and grow it as you earn more,
you're going to be a millionaire by the time you retire.
If you don't, you're going to be in the same boat
I was at 27 and broke or trying to figure it out
or others at 50 or 60 will have nothing.
The opportunities exist and if you can invest in
just a stock index fund, an SPX fund,
Vanguard I mentioned because it's the lowest cost,
do it, do it, do it, do it, do it, do it.
Two less beers.
No, these days one less beer.
One less fireball shot and you can be rich.
Have those first five fireballs, but those last two,
that's for the future.
We sell the company
and I don't remember the exact price of Yahoo stocks.
It was like $250.
And from my perspective,
this was April of 2000 when it closed,
and I don't see the stock market just going up forever.
Literally, the Nasdaq just passed 5,000
which is where it was back then in 2000.
Like I said, I traded stocks.
I started and sold a hedge fund
and so I understood what happens in the market
and gravy trains don't last forever and so I'm like,
"Look, this was crazy."
It's always been a little crazy,
but it's getting even too heated.
And so I had to wait six months
before I could hedge my stock,
meaning buy an offset in case it went down,
so I literally took every penny I had,
20 some million dollars in cash,
and I put it on an index against the entire market
and that put was for six months,
knowing that it got me to the point
where I can hedge all my Yahoo stock
but if the market crashed prior to that,
I was as good as I could be.
The market didn't crash.
I lost every penny,
but the minute I was allowed to,
I hedged everything, everything, everything, right?
Everybody thought I was an idiot.
There's literally a CNBC interview where he said,
"Mark, don't you feel stupid?
Yahoo stock is up another $100."
By this time, I had already sold the Mavs
and I remember sitting on the team bus
talking to our then coach
and one of our coaches, Dell Harris, and he goes,
"Look at all that money you left on the table."
I'm like literally in one day
the stocks were jumping so crazily,
one day I paid for the entire Mavericks
in the stock move of one day and they're like,
"But you left all this on the table."
And I'm like, "Patience, patience."
I did an interview on CNBC and he goes,
"Don't you feel horrible that you left
"a billion plus dollars on the table?"
It's on tape and I said,
"Yeah, I feel really bad flying around in my G5s.
"It's just horrible."
But everybody thought I was an idiot,
even people who worked for me.
I told everybody and Tod listened,
some people did and some people didn't
because every single person who had worked for us
for more than a couple months
was at least on paper a millionaire
and that was 300 plus people
and so we had a lot of smiley faces around the office
and I'm like, "Look."
And they're like, "See you're wrong,
"the stocks are going up."
And then the bubble burst and it went boom
and it's unfortunate.
A lot of people got crushed,
but because I hedged everything,
I actually benefited in some respects
and came out further ahead.
- Thank you guys so much for watching.
I hope you enjoyed.
I'd love to know what did you think of the video?
What was your favorite clip?
What was the lesson that struck home most for you?
What are you going to immediately apply to your life
or your business?
Leave it down in the comments below.
I'm super curious to figure out what you guys thought
and I'm going to join in the discussion.
I also want to give a quick shout out to Frode.
Thank you so much for picking up a copy of my book,
Your One Word, and doing that awesome review
on your YouTube channel.
I really, really, really appreciate the love, man.
- Today, we have a great book, Your One Word,
by Evan Carmichael.
- So thank you guys again for watching.
I believe in you.
I hope you continue to believe in yourself
and whatever your one word is.
Much love.
I'll see you soon.