Mark Cuban blog post “pressed”

An extract from a Mark Cuban blog dated August 2010.

I have focused on the part about the cost and scarcity of capital rather than the bit about the stock market being for idiots.

 

“Capital found its way to where people/funds thought they were smarter than the rest. Some people thought they understood the tech markets better than others. Some thought they understood retail better, etc.  The belief that an individual/fund had an advantage  drove where capital was allocated.  People posted good performance or identified macro opportunities and put their own and others money to work.  Others saw the success and followed.  Like the saying goes “first there were the innovators, then the imitators, then the idiots”.    Fortunately for market participants over much of the history of the stock market, if you were  the innovator that was  smarter and faster than the other guys, you could make money on the long and / or short side of the market before the imitators and then the idiots flooded the market.

The door was open to opportunity in the past simply because capital was relatively expensive. It was expensive to raise, it was expensive to borrow.  High cost of capital creates scarcity of capital.  The more expensive the scarcer. The scarcer the capital, the more untapped opportunities just waiting for innovators to exploit and the longer it took the imitators and idiots to chase the same opportunities and close them. Which is why you found funds and smart people posting great returns over a long period of time.”

Full blog post is found on the link below

The Stock Market is still for Suckers and why you should put your money in the bank.

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