scorecardresearch4 investing mantras to learn from American billionaire entrepreneur Mark

4 investing mantras to learn from American billionaire entrepreneur Mark Cuban

Updated: 14 Mar 2023, 01:18 PM IST

Cash is king. How many investors have you heard saying so? Mark Cuban, a veteran investor and billionaire has a unique take on investments that so many of us know but choose to ignore out of greed and overdependence on equities to grow wealth.

Mark Cuban warns against the compounding effect on debt too, if not repaid in time.

Mark Cuban warns against the compounding effect on debt too, if not repaid in time.

The market is uncertain right now. Traders have no clue which way to move. Investors are unsure if they should avail themselves of the downtrend in prices or wait for the market to fall more. Whether it is just the high-valued stocks retracing their path back to their normal valuations or the market responding to the most recent Hindenburg Research, almost all sectors have taken a beating. 

Such times of uncertainty in the stock market are common, thus, making it difficult for even the most veteran investors to traverse the constant ups and downs. During such tumultuous times, well-known serial investor and billionaire Mark Cuban shared how to do nothing when not knowing what to do.

Cuban is not a new name in the business world. A reputed American businessman and investor, Cuban founded 10 companies while investing his earnings in 231 start-up firms to date. His net worth is an estimated US$4.8 billion, which makes him one of the most sought-after angel investors in the US.

Lay down quietly

Listed as his first rule of investing, Cuban remarks, “When you don’t know what to do, do nothing”. This is not the first time that the market has plunged so low that it has forced many ignorant investors out of the market while those experienced continued to load up on stocks and mutual fund units to take advantage of the constantly falling prices. Cuban swears by his deadbeat attitude as a tried and tested approach to behaving in the market. Even after having so many years in the market, Cuban swears by this rule and justifies his position on avoiding investments with inherently unrecognized risks involved.

Get rid of lingering debt

Pay off any credit card or other type of consumer debt that has an interest rate of five per cent or higher. Your adversary is compound interest. You have a slim chance of earning more money than you are paying in consumer interest rates. Pay it back.

Seems like Cuban is not a big fan of letting too much debt get the better of him. However, you cannot help but appreciate this observation of how debt continues to mount if not taken care of it in time. The reason is the compounding effect that can help your money grow while also adding to your debt.

Don’t underestimate cash

It is okay if markets are volatile. Every market correction need not be a good opportunity to buy. Remember that there are risks involved in every investment, which is why one must not be quick to dispose of cash in the market. During uncertain times, it helps to put the money in the bank. It is okay to stay still in a market, especially, when you do not understand the factors governing certain investments. Doing nothing is a viable and preferable investment strategy in times of extreme uncertainty, such as what we are currently experiencing.

Pay attention to your expenses

Are you aware of where your money is going? Where and how did you last spend your money? How much money would you have earned as interest on the money you otherwise spend? Evaluate your annual expenses. This will help you assess how much money you spend in a year. If you are a wise shopper and take advantage of cash, quantity, or other types of discounts, you will get a better return on your money than if you invest in the stock market.

Many people do not realize the value of liquid assets. Pouring on money in the market hoping that it will do good to your investment portfolio may not be the best idea after all, especially, when the money moves and sways beyond your understanding. A few lakhs of rupees in your bank deposits will help you fare better and enhance your net worth in the long run than all the unwarranted investments made on the advice of stock brokers or financial advisors.


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First Published: 14 Mar 2023, 01:18 PM IST