`Put Money in Bank,' Not Stocks, Cuban Says: Chart of the Day
Stashing cash in a bank is a better choice for investors than buying U.S. stocks, according to Mark Cuban, a billionaire entrepreneur who owns the Dallas Mavericks basketball team.
“Something is going to give in this market,” Cuban wrote about stocks in an Aug. 20 posting on his Blog Maverick website. “I want to have as much capital available as possible for when it happens.”
As the CHART OF THE DAY shows, cash was a more lucrative investment than stocks during the past five years. The Ryan Cash Index produced an average total return of 3 percent annually for the period, while the return for the Standard & Poor’s 500 Index amounted to negative 0.4 percent a year.
“Put your money in the bank where it is insured,” Cuban wrote. Now isn’t the time to chase stocks, he added, when the cost of borrowing is relatively low and money is pouring into bond mutual funds. “It is not a bad thing to accumulate cash right now.”
About $41.9 billion flowed into bond funds this quarter through Aug. 11, according to data compiled by the Investment Company Institute. Equity funds, by contrast, had $16.3 billion in outflows.
David Kotok, chief investment officer of the Cumberland Advisors money-management firm, took a different view yesterday in a market commentary. “Our allocation to cash is zero,” Kotok wrote. “Most of the stock markets in the world are cheap.”
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To contact the reporter on this story: David Wilson in New York at dwilson@bloomberg.net
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