Tuesday, August 16, 2011

Mark Cuban interview: "Buy and hold is a crock"



Entrepreneur and Dallas Mavericks owner, Mark Cuban recently chatted with Alan Murray at the Wall St. Journal about investing, entrepreneurship, job creation and innovation, patent trolls, and the NBA. 

Mark kicks things off on a frank and "controversial" note by stating up front his belief that, "buy and hold is a crock of shit", and the idea that one should be almost fully invested in the markets at all times is similarly bunk.

As Cuban puts it: "Unless you really have a commitment to something, just keep your money in cash - knowing that at some point in time there's going to be a week or two like we've had [recent volatility and stock market plunge]."

Mark explicitly states that these are his times to look for opportunity in the market, and implicit in his statements are a belief in the value of market timing and his own ability to find relative bargains in the capital markets. He likes to find things that are cheap, but is not seeing the bargains he needs in leading shares yet. You'll hear more about what he's doing and his philosophy on the current realities of trading and investing in the interview.

What's really interesting to me, beyond the investing discussion, are Mark's comments on patents and the current business environment. Cuban says patent laws and patent litigation are having a "huge", negative effect on the economy and job creation, particularly with technology companies. In fact, he flat out says, "You don't need patents...ideas are easy", citing his own experience with Broadcast.com and its technology patents in the dot com boom environment.

Note that Cuban's remarks on defensive purchases of patent troves came just ahead of the Google - Motorola Mobility deal (driven largely by patent protection needs for the Android OS in the litigious mobile phone industry) announced this week.

There are a few things that I may not agree with in this interview (mostly Mark's ideas about government grants for job creation), but I really like the fact that Mark speaks his mind and is just so off the cuff and straight up with his remarks. Really refreshing at a time when you see so many mealy-mouthed individuals hemming and hawing with their measured, pre-planned responses in interviews. Great stuff, watch and enjoy.

Related posts: 

1. Howard Lindzon interviews Mark Cuban on StockTwits TV - Finance Trends.

2. Billionaires are different than the rest of us - Abnormal Returns.

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