Businessman, investor, owner of Landmark Theatres and Magnolia Pictures, chairman of AXS TV, an investor on Shark Tank and Dallas Mavericks owner Mark Cuban made his fortune in the dot-com bubble of the late 1990s, when he founded and then sold Broadcast.com for more than $5 billion.
You’ll recall that the Internet bubble exploded around the year 2000, destroying many lives. Not Mark Cuban’s, though.
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Today, Cuban believes a much more dangerous bubble has returned. Recently, he wrote in his Blog Maverick:
“Ah the good old days … Stock trading millionaires were being minted by the week, if not sooner … There were hundreds of companies that were coming public and could easily be bought and sold. You just pick a stock and buy it. Then you pray it goes up. Which most days it did.
“Then it ended. Slowly by surely the air came out of the bubble and the stock markets declined and declined till the air was completely gone. The good news was that some people were able to see it coming and get out. The bad is that others were able to get out, but at significant losses.”
” The bubble today, ” Cuban continues, “comes from private investors who are investing in apps and small tech companies … But unlike back then, when the dream of riches was from a public company, now its from a private company… People we used to call individual or small investors, are now called Angels. … Why do they call them Angels? Maybe because they grant wishes?”
Cuban says he found some 225 thousand “angels” in the U.S. alone. “You can sign up to be part of the new excitement called Equity Crowd Funding. Equity Crowd Funding allows you to join the masses to chase investments with as little as 5k dollars.”
Cuban notes that the SEC made sure that there is no market for any of these companies to go public and create liquidity for their Angels. With the new Equity Crowd Funding rules yet to be finalized, “those widows and orphans will put their $5k into the dream only to realize they can’t get any cash back when they need money to fix their car.”
Cuban concludes: “If stock in a company is worth what somebody will pay for it, what is the stock of a company worth when there is no place to sell it?”
