Mark Cuban ('Cubes' as the guys on PTI call him) has just written another article about the stock market on his weblog. This one is called 'Why do people fall in love with stocks ?'. As usual, Mark pulls no punches and tells it like it is. Some of my favorite parts:
I mean look at the concept of price targets. Someone, analyst, mutual fund manager, whoever will come on and say, “I have a price target for this stock of XXX — which is up 30pct from here.” I see it getting there over the next 6 months. Yeah right. When someone tells me they know where a stock is going, I can only laugh and ask them why they haven't mortgaged the house and put it all in the stock. Of course I know the answer. They don't want to put their money in the stock; they want YOU to put YOUR money in the stock so the price of the stock they own goes up. Get long and get loud.Why can't we just admit they are pitching a stock and treat it like a trinket on QVC.
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I have said it many times, I don't think the average investor should be buying stocks. I don't think the vast majority of fund managers are anything special either. Something my buddy Andy relayed to me a long time ago when I started buying and selling stocks has stuck with me, and I try to remind myself of before I make any investment. “When you sit at the business table you always look for the sucker or fool. If you don't see one, it's you.” The same concept applies whether you are buying or investing in a company, or buying a stock or bond. Most business deals are win win, but even then there is someone at a disadvantage. It's worse in stocks.
There is always someone on the other side of the trade. Why are they taking that side? Do you know something they don't, or do they know something you don't? You go to work and check the stock prices during the day and when you get home. Maybe you call your broker at lunch. What does the person or company on the other side do? Do you have an edge, or do they?
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One of the things I used to love to do when I had the time was short stocks. It was a hedge to the stocks I owned. More importantly, I'm a firm believer that there are tons of bad companies out of the universe of public companies, and because so few people actually short stocks, its easier to find undiscovered shorts than undervalued long stocks.
Great stuff as usual from Cuban.
Great stuff indeed. I didn`t know the expression "get long and go loud". I like it.
Cool link to Cuban's site! Yeah, market at incredible oversold levels. Of course, I'm a bit early anticipating the rally but I think it has legs for a bit. Everyone seems so bearish. The question is how much is priced in vs. the current economic strength.
With all the fears of inflation, we still really aren't seeing any and the Fed hasn't done anything yet. Everybody is so darn sure.