Mark Cuban on How to Get Rich | Hacker News Reader

Mark Cuban on How to Get Rich

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108 pointsjoshstaiger63 comments

A somewhat relevant story. 3 months ago I started saving and researching Costa Rican real estate. I figure that over the next two years a lot of people will be having a cash crunch and it will be a buyer's market in (somewhat over-built) Costa Rica.

Right now I'm not where I need to be in terms of savings or knowledge, but in 10-16 months I will be.

The interesting thing is that I have started talking to agents in CR and I can almost see things beginning to unfold. The people I'm talking to start throwing "deals" at me. It starts like "I know this may be a little soon, but I may have the perfect rental property for you" says the real estate agent. "It's $225, if you can bring 80k to the table the selling can finance the rest over 5 years"

"Sorry, not interested. I'm just not ready, I need to do more research" I say.

"Hi Mike, I spoke with the seller again. He can bring the price down to $200k, with financing over 10 years."

I say again that I'm about 18 months away from pulling the trigger.

The agent comes back with "We can probably go under $200k finance for 15 years (at about 9%) and we can furnish the place for you - a 12-15k value."

Now I don't (yet) know if this is a good deal or notbut it is pretty easy to see the leverage working here. Because I'm on the right side of the market I can throw out a low offer and see what happens. I'm not going to.

Hopefully in about a year, I will be walking in and everyone else will be running the other way, needing to sell.

I understand that everyone @ hacker news is smart enough to "get" this, but it is cool to see this in action.

Not everyone on hacker news is cool enough to use scare quotes around a word that is used in a commonly accepted sense.

my apologies -- I originally read that as "not everyone" and took it as odd misplaced arrogance. But it was a reading fail. Definitely deserve those downvotes.

Do you plan to move there? I'm thinking about this too :)

Mark gives good advice.

1. Have the discipline to save

2. Find an area you are passionate about and invest in yourself to become really really good

3. When the opportunity presents itself, make good use of it

“Luck is what happens when preparation meets opportunity.” Seneca

Another strong point he makes is that you can find the right opportunity during times of uncertainty and change in markets (such as now).

Besides what is mentioned, I find it interesting what's not mentioned: no lottery, no shotgun approach, no throw 10 different things against the wall and see what sticks.

We should make a post with collection of advices on 'how to get rich' from people who actually are rich, like Cuban.

Maybe a collection of blog posts?

And then we could publish it and get rich!

"The 2nd rule for getting rich is getting smart. Investing your time in yourself and becoming knowledgeable about the business of something you really love to do"

and

"Before or after work and on weekends, every single day, read everything there is to read about the business. Go to trade shows, read the trade magazines, spend a lot of time talking to the people you do business with about their business and the people they buy from.

This is not a short term project. We aren’t talking days. We aren’t talking months. We are talking years. Lots of years and maybe decades. I didn’t say this was a get rich quick scheme. This is a get rich path"

That's what I have been constantly telling everyone. Be passionate about what you do and don't waste your time on anything else than your passion.

its not like it'll hurt you. If your business is created around your hobby you'll get a lot more satisfaction out of it. And if you are passionate about something you'll be more successful

"If you use a credit card, you dont want to be rich"

That is such an over-statement. You've got to spend money to make money. Using credit wisely might be the only way for some people to break out of their financial status.

Good point.

Using a credit card is important to establish credit. What's more important is NEVER GETTING INTO DEBT.

What's the point of establishing credit if I'm never planning to go into debt?

This is actually a serious question -- I've been in the US for three years and I haven't bothered to acquire a local credit card, so my credit report is completely blank. Are there circumstances under which this can come around and bite me in the arse?

If you ever want to buy a house without having all the cash up front.

Credit is useful for a lot of things, and it's not likely that you'll _never_ need to go into debt. Credit is a tool that can be used properly or abused, just like anything else. It's important to have good credit ... even if you never plan on needing a loan, it prepares you in case a circumstance arises where it is necessary to obtain one, and it's just smart to have good credit established.

Never spend money you don't have, just charge things to your card and pay it off at the end of the month (or carry a balance a couple of months at a time once in a while, some people say this improves your credit score, and some companies will get pissed and cancel your account if they're not making at least some interest). Then, if you ever need it, that credit history will be there, and it is often used for things besides debt. They generally check credit when you go to rent an apartment, etc. Some people are even checking the credit of job candidates now. It's good to have good credit history.

Never spend money you don't have, just charge things to your card and pay it off at the end of the month

Isn't a debit card better for that?

A debit card doesn't count as credit in most cases.

Wouldn't using a debit card it be a better way of not spending money you don't have?

Credit is useful for buying things you don't have enough immediate cash to buy, like cars or houses. It allows you to leverage, which is a powerful concept if used wisely. For a simple example, if you buy an investment property with a 20% cash down, and you sell it for 10% increase, then your ROI is 100%.

Having a credit card is like having health insurance. Insurance allows me to reduce my risk of going broke. Hopefully you never have to use the insurance, and the average expected return may favor not having insurance, but the return is worth it. In the same way, having good credit and a credit card (even if you pay in full each month) allows you another option to get out of some sticky short term cashflow situations.

The big difference between credit cards and health insurance is that you can use credit cards and keep your expenses the same, while health insurance is an additional expense. So you can spend the same amount with or without a credit card, but gain free financial insurance.

1. Get a job 2. Save money. Wow, what insight. Though I think this could also be titled "How to Get Diabetes."

his arguments that there aren't shortcuts are good (not original, but still good).

3. There are no shortcuts (here's to you MLM slimers) 4. Know your business inside and out 5. Read about your business every day (i.e. become the smartest guy in the room) 6. Cash is king 7. buy & hold without flexibility is for suckers 8. be patient

"Read about your business every day (i.e. become the smartest guy in the room)"

Wouldn't that make you the most knowledgeable guy in the room? (of course knowledge and intelligence complement each other very well)

Having previously worked in IT for a medium-sized MLM, I can tell you that at least some of our distributors were getting relatively rich off of it. We cut at least ten or fifteen checks for more than 10k each month, the top usually being around $25k.

If you invest the effort, you can make it with an MLM. Of course, there are much better and/or easier ways, but I don't think that it's fair to call all MLMs "slimers". Most of our distributors signed up because they loved the product and it gave them a network to socialize about it with. They generally made enough money to purchase the products they'd be purchasing anyway and have a few bucks left over. I don't see the problem in this, really, as long as your company is up-front about it and focuses on the products and not the "get rich quick" stuff.

It's a great way for the entrepeneur to get rich, though. Works really well from what I've seen.

I think the problem with MLMs is that it's ugly.

People react to that. There are plenty of classes of ventures that have a similar failure rate or even a similar number of unethical practices up top, but when you et down to it, it's largely the aesthetics.

You're focusing on the exception; I'm focusing on the rule. Sure I believe you but the vast majority (Amway, Cutco, Quixtar, Herbalife, et al) are the ones that are full of slime, false promises & proliferate themselves every where. There's a huge difference between being an MLM and being an affiliate. The former you're forced to sell to friends and family, the latter you are not.

You are confusing simple with easy.

And you're confusing necessary and sufficient.

I'm not quite sure what his problem with "buy and hold suckers" is. Benjamin Graham and Warren Buffet both built financial empires by doing just that. Peter Lynch didn't too too badly, either. As of now, the only investing strategy which consistently beats the market in the long run is long-term value investing. The technical traders, such as Cramer may do well over 5 or 10 year stretches, but they inevitably have their melt-downs that wipe out everything.

When the market takes a dive, "buy and hold suckers" just keep buying. This leads to dollar cost averaging benefits that lead to even greater long-term market outperformance.

Everything else in the post struck a chord with me. It seems that discipline is king.

He and Buffett/Lynch are talking past each other. Buffett's strategy has always been buy & hold, but only buy when the price is right. So in the tail end of a bull market (like what we got in 06-07, or 97-00), he just refuses to invest and holds the cash income his stocks churn off instead. So when the market turns downwards, he has plenty of cash to invest.

Mark Cuban's referring to the suckers who believe in putting every dollar they have into the stock market, whether it's high or low. Those people end up with no cash when the market turns down, so they can't take advantage of the opportunity.

And more importantly, it's _flexible_ buy & hold meaning he can sell whenever he wants. If you buy & hold with a very firm sell date you're not doing it right.

It's hard to really know whether the stock market is "high" or "low" (if you did, you'd be rich) that's why it's important to invest slowly at all times (dollar cost averaging).

btw I recall an interview with Mark Cuban saying he answers about 5% of cold emails containing businesses/business ideas. Give him a try...

If you have the remotest way to get someone he knows to tell him about your idea, do that instead. Generally, cold emails & calls mean much, much less than a personal introduction.

Hey, with a 5% chance, all you have to do is send him 20 times more emails!

Mark Cuban on how to become an innumerate tool: http://bramcohen.livejournal.com/35949.html?thread=516461.

Hilarious, but it's hard to be right all the time.

Hey, I remember reading that post (I subscribe to Bram's blog). I had never heard of Mark Cuban before, so I ended up only remembering him because he is terrible at writing.

"Busts are when rich people started on their path to wealth." very timely.

its the people that are up and running when it turns that appear "lucky", when in reality they had been building during the downturn.

my aunt and other rich people i know always shared 'pay yourself first' , my aunt and uncle used that money (after 5 years) to get bonded in order to build their first stadium.

what do you mean 'build their own stadium'?

no, they own a construction company. Its funny cause I asked to build them a website and 'modernize' their business. My uncle then told me about how he hasn't had to bid a job in years because of his reputation.. (a whole nother business lesson)

The most valuable lesson here is: persevere in doing what you like and you will succeed.

Diversify and hedge. Name of the game. People I work with have seen their 401K's eviscerated. Mine is more or less OK, because it is "heavily weighted" into money markets, which are safer than equity markets. The "rule of thumb" for people in their 20's and 30's is to have 70% of the 401K in equity markets. I didn't follow that, and instead reduced my position in equities and increased my position in money markets, when it came to my own 401K. Now I am more or less OK while my collegues are scrambling to sell.

You're never going to get a good interest rate in money markets. Sure, safe havens are looking good over the past 12 months - but the stock market is going to kill them in the long run.

Some people try to time the market, shifting their assets between safe and risky. However, doing this involves both the labor of research and the risk of being wrong. You're probably best off in the long term if you just stay with the market. Unless you want to spend all of your time doing financial research, in which case you can probably increase your std deviation (but not your expected return).

Timing the market isn't that hard sometimes. Look for the hockey stick and avoid it. Say what you will about money market funds, but when you actually see the widespread bloodbath going on,

http://vanguard.com/us/FundsByName

...that +2.0 percent return is pretty sweet next to 75 different funds' 20 percent losses. Cuban himself evidentally recommends CDs...

He doesn't recommend CDs for 401(k)s though. He recommends it because he believes it is important to have quick access to cash in order to take advantage of opportunities.

401K? To get rich. Fuck that shit. How about: "Never work at a job with a 401K!" as a rule for how to get rich. Since your alternatives will then be to be poor and miserable or get really rich, you will be more motivated.

Personally, I'd shoot myself in my head if I ever caught myself thinking about protecting my 401K between money markets and equity markets. Figure out something meaningful. Name of my game. Hoarding biosurvival tickets earned working like some chipmunk trying to survive an endless winter that will inevitably kill them, so that you can enjoy the fleeting illusions of stability and more prosperity than your neighbor before your body turns to the same worm food theirs does seems a really shitty way to respond to finding yourself alive on this planet with a good mind and a brief window of autonomy where you might do something really meaningful.

I pretty much agree with your core idea here; "not having a 401k forces you to take care of your own retirement savings".

However, it seems like you think that saving for retirement is completely stupid. I don't mean to insult, but it sounds like when you feel like you can't make money anymore, you're going to down a bottle of whiskey and blow your brains out. Financially, that's actually probably the better idea, since you don't have to worry about having money for a zero-productivity endgame. The downside is you miss out on a lot of non-money advantages of retirement (grandkids, if you go that route, and various other things retired folks say they enjoy).

Just think of retirement funds this way; people are making sure they don't have to eat cat food bought with social security checks during the waning portion of their "brief window of autonomy", and they don't want to go for the aforementioned whiskey-and-suicide route because most people don't actually want to kill themselves.

I don't want to spend all the good years of my life living exactly like a rat doing whatever gymnastics get me enough pellets (dollars) to survive. I'd rather say "fuck that" and do what I want.

It's not a lack of money that would make me kill myself (and I don't drink alcohol, preferring drugs that enhance cognition). It's a lack of meaning. As long as I can write books, papers on ideas that interest me, or work on my patentable inventions, my life has meaning regardless of the money situation. But, if I'm spending my time worrying if I have tucked away my pellets as good as the neighbors, my life has no interest, and, at that point, why not get off the ride instead of spinning the wheel for no good reason?

Dear LPTS:

Thank you for your candor. With views like that, it works out better for pellet-hording "rats"/"chipmunks" like myself since once you exit stage left via the whiskey/suicide route, that means there will be more "pellets" for us "rats" by way of your no longer using up the social security benefits! :-)

Cheers!

Question : Why have I heard of this guy? Really, why?

A) Because he's such a mavericky maverick that he actually OWNS the Dallas Mavericks

B) Before that, he made a bunch of money in software.

C) I'm fairly sure there is some rags-to-riches tale in here as well.

He owns the Dallas Mavericks basketball team. Hence the blog name.

Sold grocery bags as a kid, sold a small computer company to make his early millions, owns the Dallas Mavericks, flipped Broadcast.com to the boners at Yahoo.com for billions, started HDNet, owns various movie production companies and distribution channels, helped produce the movie The Smartest Guys in the Room (awesome movie about Enron), ran and sold a hedge fund, angel investor in many many things, prominent blogger, and most recently made a godawful awful trade for the unbelievably overrated Jason Kidd.

One tiny addition to your list, didn't re-sign Steve Nash.

Also of recent: didn't go after Gasol when he had the chance, overpaid for Erick Dampier, paid the salaries of Devean George, Antoine Wright and Eddie Jones (old version) even though they are the same player, traded one of the best young PGs in the league (Devin Harris), overpaid for a mediocre center (Diop), and most importantly, refuses (so far) to play up tempo basketball even though the best players the Mavs have (Dirk, Howard, Terry, Bass, Kidd) would all thrive in it. I think Cuban still has a bad taste in his mouth from the run'n'gun Nellie era.

Can you tell I run a site that searches for Sports Tickets? :)

Can you tell I run a site that searches for Sports Tickets? :)

not really :-), if you have been following the Mavs from the time Cuban bought it.

Haha I can provide a similar analysis for any NBA team - it's what I know best.

because he went from nothing to become a billionaire.

His accomplishments aside, I agree. Just because you've had some success doesn't mean you actually have anything to say to the world.

But it means you have the floor. An maybe some incentive to find something to say.

Quite true. All the more reason we wish Cuban would find something to say. :-)

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