Entrepreneur Mark Cuban speaks against investment diversification

[REWahoo]

But it does make sense. You have a reason to make money for yourself, but a professional portfolio manager who could actually make money at it would have no reason to make money for you -- he'd be making it for himself.

Then why is the PPM wasting his time claiming to be able to make money for others instead of devoting all his efforts to making himself money? That makes no sense.

 

[GregLee]

Then why is the PPM wasting his time claiming to be able to make money for others instead of devoting all his efforts to making himself money? That makes no sense.

It makes perfect sense to claim to be able to make money for others. That makes your advice salable. It just wouldn't make sense to actually do it, except under the condition that the money you can make for others is sufficiently small that it wouldn't be worth your effort to get it for yourself. (Since I am often misunderstood on this kind of thing, I had better enter the disclaimer that I intend no more than my words actually say -- it makes sense for an amateur investor to think that he can do as well or better than a professional would do for him. I'm not saying it's true.)

 

[Gone4Good]

But it does make sense. You have a reason to make money for yourself, but a professional portfolio manager who could actually make money at it would have no reason to make money for you -- he'd be making it for himself.

Professional money managers get paid bonuses, the size of which is almost always performance based. Believe me, they often have millions of reasons to make money for the fund.

Also, the idea that "he'd make it for himself" assumes he has capital to invest. Beating the market by 200bp doesn't buy you much even with a six or seven figure portfolio. Do that for a fund on a realiable basis and there will be few things in life you can't afford.

 

[GregLee]

Beating the market by 200bp doesn't buy you much even with a six or seven figure portfolio. Do that for a fund on a realiable basis and there will be few things in life you can't afford.

But you said above that these professionals "can't reliably do it".

 

[arebelspy]

But you said above that these professionals "can't reliably do it".

Just cause they can't doesn't mean they don't have incentive to.