Billionaire Mark Cuban says Wall Street Bets is disrupting the financial elite: ‘They want to change the game and kick their ass’

Mark Cuban
Billionaire investor Mark Cuban.

  • Mark Cuban said Wall Street Bets members are disrupting Wall Street’s old guard.
  • The billionaire “Shark Tank” star said they’re applying lessons from crypto trading.
  • “They want to change the game and kick their ass. Which they should and have every right to.”
  • Visit Business Insider’s homepage for more stories.

Day traders are shaking up the status quo by applying the rules of digital assets to the stock market, billionaire investor Mark Cuban said in a blog post on Sunday.

The “Shark Tank” star and Dallas Mavericks recalled that as a child, he once attended a stamp show where he bought a stamp from one dealer then sold it for 50 times the price to another dealer in the same room. The experience opened his eyes to the fact that traditions and inefficiencies exist in every market.

Wall Street Bets members joining forces to pump stocks such as GameStop and AMC in recent days reminded him of his stamp-arbitrage days, he said. 

Read more: A veteran options trader breaks down the intricate strategy that Reddit traders used to outsmart Wall Street’s bet against GameStop – and shares 2 ways the parabolic rally could permanently alter the stock market

Moreover, younger investors have learned from trading Bitcoin and other cryptocurrencies that they can collectively boost the prices of digital assets and generate wealth for all involved, he continued.

“WSB traders are applying the same principles of the digital/crypto world to the stock market and they are loving the fact that the old schoolers are hating it,” Cuban said. “The old schoolers think they are smarter. They are not.”

The amateur investors – a crowd that includes Cuban’s 11-year-old son – are more than happy to ignore conventional metrics such as price-to-earnings ratios and free cash flow.

“This generation doesn’t care what Old School Wall Street thinks, or says about valuations,” Cuban said. “They have learned from their experiences watching Wall Street go up and down and making people who aren’t them a ton of money, that it’s a game designed to reward the people with the most money.”

Read more: Bank of America warns of 3 looming catalysts that could send the bull market crashing in 2021 – and shares how to position for the ‘big change’ as the WallStreetBets crowd fights against the system

“That all these narratives are just sales pitches designed to sell stocks,” he continued. “They want to change the game and kick their ass. Which they should and have every right to.”

Cuban added that the trader collective could target “any hedge fund, any stock, any time, for any reason and change the game.”

He said it was the same as a major Wall Street analyst moving a stock by putting out a recommendation, but the Reddit version has “much more power and impact.”

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‘Shark Tank’ star Mark Cuban compares Bitcoin boom to dot-com bubble, and warns many cryptocurrencies won’t survive the coming crash

mark cuban

  • Mark Cuban compared the cryptocurrency boom to the dot-com bubble, recommended buyers hedge their bets, and warned them about the dangers of debt in a string of tweets this week.
  • “Watching the cryptos trade, it’s EXACTLY like the internet stock bubble,” the “Shark Tank” star and billionaire owner of the Dallas Mavericks said.
  • Cuban sold his startup to Yahoo in 1999 and managed to protect his billion-dollar windfall when the market crashed a few months later. “My advice? Learn how to hedge,” he tweeted.
  • “If you are taking on debt that you can’t afford to pay back to invest in crypto (or stocks or currencies), YOU ARE A FOOL and there is a 99% chance you will lose EVERYTHING,” Cuban added.
  • Visit Business Insider’s homepage for more stories.

Billionaire investor Mark Cuban compared the Bitcoin boom to the dot-com bubble in a flurry of tweets this week, predicting a large number of cryptocurrencies won’t survive the coming crash.

“Watching the cryptos trade, it’s EXACTLY like the internet stock bubble,” the “Shark Tank” star and Dallas Mavericks owner said. The cryptocurrency market recently achieved a $1 trillion market capitalization for the first time, as Bitcoin and other digital coins more than quadrupled in value over the past year.

“I think Bitcoin, Ethereum, a few others will be analogous to those that were built during the dot-com era, survived the bubble bursting and thrived, like Amazon, eBay, and Priceline,” Cuban continued. “Many won’t.”

Read more: The CIO of a $500 million crypto asset manager breaks down 5 ways of valuing bitcoin and deciding whether to own it after the digital asset breached $40,000 for the first time

Bitcoin, which hit a record high above $41,000 less than a week ago, fell by as much as 21% on Monday to trade around $30,100, before recovering to $35,500 by Tuesday.

Cuban sold his internet-radio startup, Broadcast.com, for $5.7 billion to Yahoo in 1999. He received $1.4 billion of the search giant’s stock as a result, and swiftly enlisted Goldman Sachs to help protect his windfall as he recognized the frenzy around technology stocks wouldn’t last much longer. He advised crypto buyers to follow his lead and hedge their bets too.

“MANY fortunes will be made and LOST as we find out who has the stomach to HODL and who doesn’t,” he tweeted, using the acronym for “hold on for dear life” which is popular among crypto fans. “My advice? Learn how to hedge.”

The tech billionaire also cautioned crypto buyers against overextending themselves financially.

“If you are taking on debt that you can’t afford to pay back to invest in crypto (or stocks or currencies), YOU ARE A FOOL and there is a 99% chance you will lose EVERYTHING,” he said. “Personal disaster stories are built on leverage.”

Read more: Goldman Sachs says to buy these 29 stocks poised to deliver the strongest sales growth through year-end

Finally, Cuban downplayed claims that crypto is an alternative to fiat currency or a hedge against currency debasement, describing them as “sales pitches.” Insiders also tried to justify the sky-high prices of internet companies in the late 1990s, he pointed out.

“Crypto, much like gold, is supply and demand driven,” he tweeted. “The biggest sales pitch is scarcity vs demand. That’s it.”

Read more: An ETF expert breaks down his top 5 predictions for the industry in 2021 – including 4 funds that are among the best to buy, and why ARK Invest won’t be able to repeat its dominance

Cuban’s warnings about crypto echo his comments last year on the day-trading boom. He said the rush of retail investors into Hertz, JCPenney, Kodak, and other questionable stocks “feels just like” the dot-com bubble.

“You’re doing the same thing they did in the late ’90s,” Cuban continued. “You’re rolling it. You think everybody is a genius in a bull market.”

“‘I have to go all in’ – that’s the type of thing that we saw exactly in the internet bubble,” he added.

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