Mark Cuban: "Everything is a meme" in this market
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Mark Cuban. Photo: Julia Beverly/WireImage
Billionaire investor Mark Cuban says today's market mania is a far cry from the dotcom bubble he navigated, and given retail trader behavior, it could be even riskier.
Why it matters: As strategists continue to raise concerns about a new market bubble, Cuban points out a different concern: that individual traders can "move stocks more than analysts can," he wrote in an email to Axios.
What he's saying: "Back then day traders hade minimal online resources," Cuban noted.
- But now "younger traders are far more risk tolerant than before. They see the volatility of crypto, particularly meme coins and see stocks as just one more version of meme coins."
- "Back then it was anyone with a .com could go public but there were still limits on going public. Now anyone can issue a meme coin."
Catch up quick: Ahead of the dotcom bubble, Cuban made what has been called one of the "top 10 trades on Wall Street."
- Cuban and his business partner sold their company Broadcast.com to Yahoo for $5.7 billion in stock in 1999, months before the bubble burst.
- He sold calls and bought puts on his holdings, in a hedge that insulated him from the eventual decline of Yahoo, which was later sold off into pieces.
Zoom out: "From the kids I talk to, they see (Nvidia) and the big 7 the same way. Everything is a meme to individual traders these days," Cuban wrote.
- His take underscores a generational shift in market psychology driven by social media, crypto culture, risk taking, and retail traders.
Case in point: Technology stocks have outpaced the S&P 500 for the last two decades. Meanwhile, bitcoin is at all-time highs.
- GameStop stock is also up more than 2,000% in the last five years.
The bottom line: With the democratization of access to information and trading platforms, retail trading will only grow from here.
- Given their rising influence on the market, institutional investors will also start paying more attention to retail activity.
