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Mark Cuban Calls Warren Buffett’s Buy-And-Hold Strategy A ‘Crock’ – Which Billionaire’s Investment Style Aligns With Your Goals?
Mark Cuban’s bold claim that Warren Buffett’s famous buy-and-hold strategy is a “crock” has reignited debates within the investing community.
Cuban, known for his unapologetic views and a net worth surpassing $5 billion, isn’t shy about challenging established investment philosophies. His thoughts on diversification, particularly, stir the pot among traditional investors, with a growing number backing his aggressive approach.
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According to Buffett, “diversification is a protection against ignorance,” a guiding principle that’s long been at the heart of his investment strategy. Buffett’s approach leans on the idea that spreading your money across various assets can shield against market downturns.
For many retail investors, index funds are the go-to for diversification. These funds mimic broad market indexes to provide a stable, if not flashy, return over time.
On the other hand, Cuban cuts through the noise with a more concentrated strategy. He’s famously said that “diversification is for idiots” and that the buy-and-hold strategy embraced by Buffett devotees is essentially worthless.
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Cuban’s view resonates with some investors who are laser-focused on beating the market rather than merely matching it. According to Morningstar research, professional money managers who outperform benchmarks often make big, bold bets – not by playing it safe with a diverse portfolio.
For investors grappling with which billionaire to follow, a look at the numbers might help. Cambridge Associates’ 2017 study supports diversification: “Diversified portfolios still prevail over the long term,” the report says, suggesting that a diverse strategy might cushion portfolios against severe market drops and provide more consistent returns over decades. This echoes Buffett’s success with slow and steady wealth-building.
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But not everyone is convinced. Cuban’s strategy, which focuses more on tech and innovative industries, has paid off handsomely in a world increasingly reliant on technology. He believes focusing on a few high-conviction bets will generate better returns, a sentiment shared by other billionaire investors.
Real estate often emerges as a contender for those seeking alternatives to the traditional stock market. High home prices and mortgage rates have made owning property trickier, but the allure of steady rental income hasn’t faded.
See Also: ‘Beating the market through ethical real estate investing’ — this platform aims to give tenants equity in the homes they live in while scoring 17.38% average annual returns for investors – here’s how to join with just $100
Meanwhile, data from Nareit shows that commercial real estate offers steady returns and lower volatility than stocks. The numbers speak volumes – commercial real estate has a lower correlation to the S&P 500, making it a useful hedge for many investors.
And if real estate doesn’t entice, fine art might. According to data from the Citi Global Art Market chart and as cited by CNBC, contemporary art outperformed the S&P 500 over the last two decades, with annual returns of 11.5% compared to the market’s 9.6%. Cuban’s strategy might inspire you to look at alternatives like blue-chip art, which offers unique opportunities beyond stocks.
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This article Mark Cuban Calls Warren Buffett’s Buy-And-Hold Strategy A ‘Crock’ – Which Billionaire’s Investment Style Aligns With Your Goals? originally appeared on Benzinga.com
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Sales of existing homes fell in September as house hunters remained on the fence about buying a home despite mortgage rates easing during the month.
Existing home sales slipped 1.0% from August’s tally to a seasonally adjusted annual rate of 3.84 million, the National Association of Realtors said Wednesday. That marked the lowest rate since October 2010. Economists polled by Bloomberg expected a pace of 3.88 million in September.
On a yearly basis, sales of previously owned homes were 3.5% lower in September. The median home price rose 3.0% from last September to $404,500, marking the 15th consecutive month of annual price increases.
“Home sales have been essentially stuck at around a 4 million-unit pace for the past 12 months,” NAR chief economist Lawrence Yun said in a press release.
There have been significant challenges that have weighed on sales activity, including a lack of inventory, escalating prices, and elevated mortgage rates. Last month, however, those factors turned around.
The Federal Reserve cut its benchmark rate by half a percentage point in September. While the central bank doesn’t set mortgage rates, its actions influence their direction of movement.
Mortgage rates hit the lowest level since February 2023 ahead of the Fed decision to ease, while listing inventory picked up.
But overall, that hasn’t been enough to entice buyers.
“Some consumers are hesitating about moving forward with a major expenditure like purchasing a home before the upcoming election,” Yun said.
Tesla (TSLA) reported mixed third quarter results after the bell on Wednesday, but the stock jumped in after-hours trading as investors cheered the earnings beat, higher gross margins, and news that Tesla’s cheaper EV is on track for production next year.
For the quarter, Tesla reported revenue of $25.18 billion vs. $25.4 billion per Bloomberg consensus, higher than the $25.05 billion it reported in Q2 and also topping the $23.40 billion Tesla reported a year ago. Tesla posted adjusted EPS of $0.72 vs $0.60 expected, on adjusted net income of $2.5 billion and free cash flow of $2.9 billion.
The closely watched gross margin figure came in at 19.8%, much higher than the 16.8% expected.
Tesla shares were up nearly 8% in after hours trade.
“We delivered strong results in Q3 with growth in vehicle deliveries both sequentially and year-on-year, resulting in record third-quarter volumes,” the company said in its earnings deck. “Preparations remain underway for our offering of new vehicles — including more affordable models — which we will begin launching in the first half of 2025.”
Earlier this month, Tesla (TSLA) announced third quarter deliveries that slightly missed expectations, sending the stock lower.
Tesla said it delivered 462,890 vehicles in Q3, up 6.4% quarter over quarter, to mark the first quarter of delivery growth this year. The numbers also came in ahead of the 435,059 EVs the company delivered in the year-ago period. But Wall Street had expected Tesla to deliver closer to 463,897, according to Bloomberg.
“Refreshed Model 3 ramp continued successfully in Q3 with higher total production and lower cost of goods sold quarter-over-quarter. Cybertruck production increased sequentially and achieved a positive gross margin for the first time,” Tesla said in its report.
Tesla said it expects vehicle deliveries to achieve “slight growth” in 2024.
Ahead of Tesla’s Q3 disclosure, shares were down approximately 11% since Tesla revealed its robotaxi, dubbed the Cybercab, at its showy “We, Robot” event from the Warner Bros. studio lot in Burbank, Calif., on Oct. 10.
The debut and release of a cheaper EV is what many analysts and industry watchers believe will spur the next leg higher of EV sales, as even CEO Elon Musk has said before. During its Q2 report, Tesla and Musk said the company remains on track for the production of new vehicles, likely including a cheaper EV, in the first half of next year.
Investors and analysts were left wanting more details from Tesla’s “We, Robot” event on the Cybercab itself and detailed testing plans, along with questions about the development of Tesla’s sub-$30,000 EV, dubbed the Model 2.
Transak disclosed a data breach affecting over 92,000 users after a phishing attack compromised an employee’s laptop.
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The Dow plummets more than 600 points and is on track for its worst day in more than a month
The Dow Jones Industrial Average and other major indexes suffered a steep decline Wednesday afternoon as the yield on the benchmark 10-year U.S. Treasury note continued its upward climb, reaching 4.23%—a level not seen since July.
In the afternoon, the Dow dropped 631 points, or 1.4%, heading for its worst day in over a month. Meanwhile, the tech-heavy Nasdaq and the S&P 500 declined by 2.2% and 1.4%, respectively. However, there was some relief for investors as oil prices eased, with West Texas Intermediate (WTI) futures trading around $70.65 per barrel.
The Federal Reserve’s Beige Book, released in the afternoon, reported that economic activity remained largely unchanged across the 12 Federal Reserve Districts, with the Southeast significantly impacted by a harsh storm season.
On Wednesday, all eyes are on Tesla (TSLA) as the company prepares to release its latest earnings report. Analysts expect earnings per share to be 60 cents, down from 66 cents a year ago but an improvement from 52 cents in the previous quarter, according to FactSet estimates. Revenue is projected to hit $25.4 billion, compared to $23.3 billion in the third quarter of 2023 and $25.5 billion in the preceding quarter.
Apart from Tesla, investors are closely monitoring earnings reports from other major corporations, including AT&T (T), Boeing (BA), and Coca-Cola (KO).
McDonald’s stock plunges over 5%
McDonald’s (MCD) shares took a sharp hit, falling over 5% after the Centers for Disease Control and Prevention (CDC) linked the chain’s Quarter Pounder burgers to an E. coli outbreak. The outbreak has led to 10 hospitalizations and one death, driving a significant decline in McDonald’s stock during the afternoon trading session.
As of now, 49 cases have been reported across 10 states between Sept. 27 and Oct. 11, with a majority of illnesses occurring in Colorado, Nebraska, Utah, and Wyoming. The CDC noted that most of those affected had eaten a Quarter Pounder. Investigators are working swiftly to identify the contaminated ingredient.
Spirit Airlines stock soars 30%
After a failed attempt at merging with JetBlue (JBLU-0.80%), ultra-low-cost carrier Spirit Airlines (SAVE+28.01%) is reportedly turning back to a familiar partner. The Wall Street Journal (NWSA-0.34%), citing people familiar with the matter, reports that Spirit and Frontier Airlines (ULCC+3.05%) are in early talks over a potential merger. The news sent Spirit’s stock soaring nearly 30% on Wednesday.
–Francisco Velasquez and Rocio Fabbro contributed to the article
The semi-autonomous region of Tanzania is taking advantage of a sandbox regulatory framework adopted in July.
Bitcoin’s correction ignited selling in altcoins, which are slipping below critical support levels.
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