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Mark Cuban, Tony Robbins, & My Personal Rants on the Economy

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A couple of big name people with a lot of money and friends with money, Mark Cuban and Tony Robbins, basically say that now is not the time to be putting money into the market. At the least, they bring up some interesting points that you might want to consider. And I have a slightly different take than either of them. But let’s start with Cuban.

Cuban’s Take on the Market

Back in May, I highlighted Cuban’s commentary on why the market is becoming harder and harder to make money in by investing in fundamentally strong companies.

This week, Cuban wrote a new post, poetically titled “The Stock Market is Still for Suckers & Why you Should Put your Money in the Bank“. Geez, Mark, could you be a little more direct, please?

The basic premise of his post is that ‘capital is no longer expensive and it is no longer scarce’, and until it becomes scarce, it’s going to be hard to make money in the market, or elsewhere, so you should hold on to your money.’

I think the points in his ‘what business is Wall Street in‘ post were a lot more spot on, but this one brings up some interesting points as well. Cuban thinks that the stock market is no longer for him or for any average investor. It’s too risky, too panicky, and too manipulated. Over the last few years, it’s hard to argue with that.

mark cuban tony robbins

Tony Robbins Economy Rant

The next is Tony Robbins. Now, I’m not a big Tony Robbins fan, in the least, but his 23 minute rant is entertaining and he brings up some good points (unfortunately he rambles quite a bit).

Here’s the first of two videos:

If you don’t have the time to sit through all 15 minutes and 8 minutes in the sequel, here’s a summary:

  • He has a lot of friends with a lot of money who correctly predicted back in early 2008 that the market was headed for a big crash. They are now saying the same thing again and getting out of the market.
  • This is the longest period of unemployment (time it takes to get a job) in modern history.
  • The housing market is absolutely horrible now that the stimulus money is gone, and it’s getting worse.
  • The baby boom generation is no longer spending and they were the reason why we had such huge economic growth (financed by debt). Without them spending, there will not be a recovery in the near future and many companies will struggle.

I don’t take much stock in his first point, but the next two are true and backed up by statistical data. The last point is opinion mixed with some fact, but I think it’s a good point. When a generation fundamentally changes their consumption habits and over 70% of the economy is based on the previous consumption habits…. you’re in for some hurt from an economic standpoint, even if the fundamental switch to saving has its benefits. And we are seeing that happen.

And Here’s my Own Bigger Picture Rant…

I agree with some of Cuban and Robbin’s points, but I have a slightly different big picture take on what we’ve seen happen to the market over the last 10+ years now (where absolutely zero capital gains have resulted from the market as a whole) and where it might be headed.

The market gains over the last century have been driven by productivity increases. First it was the industrial revolution, airplanes and cars, advancements in health and medicine, then the computer and other electronic technologies, and finally the Internet and data/information advancements. And all of those things were driven by harnessing energy from cheap fossil fuels and the globalization of economies from around the world.

There’s still room for some gains in the market driven by improvements in all of these areas, and particularly at the micro level with individual companies, but I think we’re at a point in history where the gains are going to be minimal from the market as a whole. We’ve extended people’s lives beyond what is natural. We’ve solved transportation to the point that you can go anywhere in the world. We’ve solved cheap energy (for now). We’ve solved taking from the planet to create buildings and products that we can sell. We’ve solved data exchange. And we artificially inflated growth with debt and played that game out.

We’re not going to see huge gains (as a whole) in equity markets until we see the next big thing that completely changes human life as we know it. When or what could that be? I have no idea. What should you do with your money? I can’t tell you that (because I have no idea). But what I can tell you is that living frugally within your means, saving your money and having a big position in cash for emergencies and tough times, and building your skills and career to be economy-proof are all things that you can’t go wrong with. Prepare for the worst and hope for the best.

What’s your take?

About the Author
I am G.E. Miller, & this is my story. My goal is financial independence ASAP. If you share that goal, join me & 7,500+ others by getting FREE email updates. You can also explore every post I have written, in order.

  • Paul says:

    Great Posts.

    I have moved quite a bit into bonds (also not the best, I know) as they have been performing better than anything else. To say the stock market isn’t right for the average investor might be correct in that the only way to realize the same gains people have realized in the past few years is through active management.

    I can sit back and get 5-7% in a total return account without doing anything. Not ideal, but for the next 3-6 months it will do just fine.

  • Jesse says:

    Interesting post.

    I consider myself avid saver and good financial manager. However, I would like to hear more about how you think one should economy proof your skills and career. I’m currently in a turbulent field, (marketing communications) and thinking about how to either make my job economy proof or changing careers. What are your suggestions?

    • G.E. Miller says:

      @ Jesse – this topic really deserves it’s own post (coming soon), but for starters, look at lines of work that will always be in demand and are not easily replaced if laid off, like medical, auto maintenance, plumbing, electrical, etc. Also, look at emerging technologies like batteries for hybrids, solar and wind energy, etc. Marketing people are easily replaced (I’ve been in marketing myself). If you’re going to stay in marketing, how can you differentiate yourself as a specialist or someone who really stands out as a risk taker?

  • Paul says:

    Thanks G.E.

    I feel it is really the only way to do it now. Especially in the context of your previous posts about none of us ever really “retiring” in the sense our grandparents did; I am comfortable with these sorts of returns (for now).

  • Vytas says:

    I see that the whole world economy runs on a debt based system. When money is poured into markets we have booms, when they (banks) stop putting money into markets we have crashes. As long as the system prevails we gonna have repetitive problems in our economies. I think your advice at the end of the article is very good for times like we are in now. Living frugally, saving money and having cash for hard times is the best solution till the picture gets brighter.

  • Tomas says:

    To your “everything’s already invented” point, where can I find a bottled orange juice that actually tastes like an orange??
    Corporate profits have been going up significantly in the last decade, the reason the market is not going anywhere is because it started from a P/E much more inflated than the one in 1929 (and it’s still pretty high).

  • Big Stew says:

    I know hindsight is 20/20, but considering what the market did–and was doing for the past month at the time–after this article came out, Cuban and homeboy look like jerk-offs. Holler.

    P.S.–Bonds are looking soo sexy right now!


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