Mark Cuban has presented an editorial on the differences between investing and speculating. He proposes that investors no longer exist and the vast majority of those in the market are speculators. He concludes with his own opinion about how corporate profits distributed to shareholders should be taxed. True investors in businesses would not be taxed, while speculators (or secondary investors) will not receive the benefit. Mark has some interesting ideas for reshaping the economy.
If you give your money to a mutual fund or hedge fund that puts money into public stocks and bonds, thats super speculation… Why Super Speculation? Because there is a 99 pct certainty that you are 3rd in line to get paid with whatever earnings the fund generates with your money.
First the fund itself has to get paid. They take money off the top. Then the person who makes the investment decision has to be concerned about keeping their job. You see if the fund doesnt outperform its peers or comp indexes, then the person who is responsible for the fund is out of a job.
Do you think that person cares more about putting a roof over his family’s head or you? Which means when push comes to shove, unless there are strict limitations, that fund manager is going to take the chances necessary to outperform his comps.
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11:43 am (reply)
Interesting indeed. A while back I said I don’t invest in mutual funds and Wall
Street=Casino. Now a billionaire comes in and chimes in similarly.
He does put an interesting perspective on it. That you are third in line to get
paid. He left out the government and taxes you pay so maybe it should be 4th in
line….