If You Missed It, Here’s Thousands Of Dollars In Free Advice From Mark Cuban On Reddit
His “ask me anything” session is another sign of the exclusive culture of investing finally shifting mainstream
Maybe you just got back from a long camping trip. Maybe you beat your head a little too hard into the desk last time. Maybe you literally are living under a literal rock. The rest of the world, however, was here and still hasn’t escaped from the sudden phenomenon that was the $GME short squeeze.
Background
A brief history tells that the hints of something big to come materialized over a year and a half ago with famed investor Michael Burry (as profiled in the hit film “The Big Short”) buying huge amounts of Gamestop securities and advising the company’s board that his firm, Scion Asset Management, “believes the opportunity for a game-changing buyback cannot be missed and recommends the Board act to ensure the completion of the authorized buyback in a timely manner.”
Burry’s letter arrived on August 16, 2019, but a further search reveals that Keith Gill aka u/Deepfuckingvalue on Reddit had shown similar optimism in the beleaguered stock even before then. As market factors like unusually large short positions by hedge funds, and news of Chewy co-founder Ryan Cohen’s addition to the Gamestop Board of Directors became known, things took off. Gill’s superhuman resolve in the undervalued company mixed with the tuned-in, tireless groupthink of the r/wallstreetbets (WSB) community to spur on a more than 1700% increase in share price.
Cut to February, where $GME has dramatically tanked from its high of $483 a share down to a current hover between $50 and $70. Not surprisingly, things were taking a noticeably negative turn in the usually hyper-enthusiastic subreddit.
Then, early on February 2nd, came the announcement: “Mark Cuban will be joining us to do an AMA….please behave.”
The celebrated entrepreneur, investor, and billionaire has made headlines since the late ’90s and remains an extremely influential figure. For a man whose Speaking.com profile estimates his normal speaker fee around $75,000, Cuban’s entrance into the community was a huge deal.
It wasn’t just hype either- Cuban returned thoughtful answers and appeared to show genuine respect for the efforts of this collective of traders.
After combing through his 51 replies, here are three categories highlighting the most valuable wisdom, insights, and inspiration from Mark Cuban’s Reddit AMA (ask me anything).
Investing Advice
On what services to use-
“…Pick the brokerage with the strongest balance sheet. What ruined it on [Robinhood] is that they didnt have enough cash to deal with the growth in accounts, margin loans and volatility. The EXACT SAME THING will happen at the next broker if you dont make sure they have a MULTI-TRILLION dollar balance sheet to be able to handle these kind of circumstances”
On why the stock is plummeting and what to do next-
“…that drop accelerates because the more the stock falls the more owners who bought on margin get margin calls. When that margin call happens, its brutal. They just take your stock, send you a fuck you note and sell your stock at the market price, no matter how low. They just want to get your cash to pay back the loan. That then accelerates the selling.”
“If you can afford to hold the stock, you hold. I dont own it, but thats what i would do.”
On his views on shorting-
“…So again, the more people shorting the stock in the company i own the better…Where you have to be careful is when the shorts are in a stock because the company is a fraud. If i short stocks, its only in companies I think are fraudulent and ripping off people.”
On losing money and moving forward
“BTC HODLers are a great example to follow. Many bought at the highs in 2017 and watched it fall by 2/3 or more. But they held on because they believed in the asset. The same applies to stocks. When I buy a stock I make sure i know why Im buying it. Then I HODL until till I learn that something has changed.”
On emerging industries within the next 10 years-
“Its starting to happen now. From mesh networks connected to traffic signals to much much more. I'm an investor in a company called Mesh-Tek. they are putting their tech everywhere.”
“…De-Fi, NFT, but there will be a lot of ups and downs along the way
AI will change everything, but 99pct of the businesses out there that say they use AI are full of shit.
Precision Medicine, Nano Technology, the MRNA technology used in the vaccines will grow.
Robotics. Green Tech, all will grow.”
On sell limits-
“I typically dont set price targets on the up side. On the down side, when i was just getting started I would set a stop loss at where my margin call would start. If you can afford to hold a stock that is going down, only sell if the reason you bought the stock has changed.”
Final thoughts
“…That said, you will do all this again. You will go after WS and the next time you will be smarter. There was only one thing that messed you all up: RobinHood and the other zero commission brokers that everyone used didnt have enough capital to fund the fight. They let you down in a big way.”
Current Event Insight
On lawsuits following Robinhood halts-
“…And there will be class action suits. And they will be combined and they will win and you will get a check for less than $10.”
On the SEC-
“If the SEC gave a shit about ANYONE other than Wall Street you would be able to go there right now and read bright line guidelines about insider trading, shorting, what is a pump and dump, what are the rules for cutting off the purchase of stocks like happened with GME et al. But they wont. They would rather litigate to regulate, which means they love to sue people in order to create new legal precedents.”
“Google my name and the SEC.”
On the aftermath-
“What has happened the past few weeks with WSB has all happened before, it was just the big guys doing the battling. The only new thing was WSB traders took them on. What i love about this now, is that if you pick your spots right and work as a group, you can hit again and again.”
On market manipulation by hedge funds-
“i dont think its manipulation. I think the rules are set to benefit them and they have years of experience exploiting those rules.
Your congress people can change the rules to make them fairer for small investors. They havent given a shit up till now. Maybe people on this board can change their minds.”
On blockchain-
“…Stocks will be on the block chain in the future, and that will make the markets much more efficient, transparent and available to the small investor.”
On if anyone might go to jail for these events-
“no.”
Life Advice
On following dreams-
First, find a job to pay your bills. Got to take care of the basics. Then get back after it. Just remember, its not in the dreaming, its in the doing
On going back in time-
Drink less, party more. Too many hangovers fucked me up
On setbacks and challenges-
“I learned some expensive lessons when i first started trading stocks. It was painful. But i tried to learn what i got right and wrong. Right now, right here. The game is changing. The hard part is ask yourself if what you believed in has actually changed.”
“…figure out what changed, learn from it and reload for the next asset. As always DO THE WORK.”
On shaking things up-
“And when you learn share…find the power in numbers.”
Final thoughts
“No disruption is easy or happens in a straight line. Stay with it. I am a believer.”
Investing- but make it social
Mark Cuban’s high-spirited Q&A is just the latest sign pointing to a significant change in the investing scene. When you review the events of the past few weeks, it only becomes more convincing:
- The Gamestop saga got as much media coverage as any major political announcement. Every network has been milking airtime to cover “Reddit Stocks” for weeks and #GME #AMC has been constantly trending across social platforms.
- As problematic as they became, retail trading apps like Webull and Robinhood did wonders for introducing the masses to engaging and investing in the stock market. Handing people a one-stop-shop with the promise of financial freedom tends to do that.
- WSB is heading towards hitting 9 million members. Countless people have had theirs lives changed-and not always in a good way. But now that the average person is interested enough to take a closer look, casual investing will be a topic in a lot more posts, stories, lives, streams, TikToks, or wherever else you get content.
- The situation has seemed to finally prompt real investigation by governments and lawmakers. Top-level committees and organizations have already scheduled multiple meetings throughout the month. Even the two most unlikely senators found common ground in supporting retail traders.
As much as people have been trying, this is the closest to any type of revolution there’s been in a decade. (It’s just a coincidence that it’s because money’s involved, right?) With all of this and billionaires like Mark Cuban standing behind the little guy, right now is the stock market’s viral moment.
Some people are going to treat it like playing Candy Crush, and some people are going to fundamentally change how they view economics. In the end, the only sure thing is that if you like the stock, then you like the stock. Just expect to get more financial advice from the chat than from Charles Schwab.
This article does not attempt to make or qualify as financial advice. Content is provided for information purposes only, and none of the information contained constitutes an offer, solicitation, or recommendation to buy or sell a security.