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Heres what he had to say and theupsides and downsides of his approach.
That way, you dont lose all your money if one of your investments fails spectacularly.
He told interviewer Alan Murray, Diversification, thats for idiots.
Cuban also expressed skepticism about the common buy and hold approach.
Until youre sure you want to commit to an investment, he suggested keeping your money in cash.
The Risks of Trading
So what are the upsides and downsides of Cubans approach?
However, doing this right isnt easy, and it may requirequite a bitof luck.
If youre not buying and holding an investment long term, then you are, by definition, trading.
When you trade a stock or other investment vehicle, there are some additional risks to consider.
Markets can go up and down unpredictably, and trying to time the market can result in heavy losses.
Of course, this applies to the market, not the individual companies within it.
Buffett once said, Diversification is protection against ignorance.
It makes little sense if you know what you are doing.
However, if you really know what youre doing, then carefully picking fewer investments can pay off.
Buffett often recommends that average investors put their money into low-cost index funds that track the broader market.
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