Mark

markets | finance | business

[Mark @MarkGrokLab]

@shevaxgod Timing wasn't lucky, he hedged the moment he could. Most people would've watched $1.4 billion ride the crash all the way down to $190 million. He build the collar instead.

[Mark @MarkGrokLab]

Mark Cuban sold a company that made $22 million in revenue and lost $16 million a year. Yahoo paid $5.7 billion for it. Six months later he was the only person from that deal who kept the money.

In 1995 he and Todd Wagner started AudioNet. It streamed live audio over the internet. They renamed it https://t.co/U0BgCLvVZC. By 1998 it went public. By 1999 Yahoo bought it for $5.7 billion in stock.

Cuban's stake was 14.6 million Yahoo shares worth $1.4 billion. But it was all stock. And he was locked in for six months.

He understood two things. The stock was overvalued. And six months is a long time in a bubble.

He called Goldman Sachs and built a zero-cost collar. He bought puts at $85 a share to protect the downside. He sold calls at $205 to pay for the puts. It cost him nothing.

Yahoo peaked at $237 in January 2000. Then the dot-com crash hit. By 2002 the stock fell to $13. Without the collar his $1.4 billion would have become $190 million. With it he kept over $1 billion.

He bought the Dallas Mavericks for $285 million in 2000. Sold the majority stake in 2023 at a $3.5 billion valuation.

He started Cost Plus Drugs in 2022. Buy generic drugs at cost. Add a 15 percent markup and a $5 fee. No middlemen. Over 2,200 medications.

Every one of these was something he understood cold before he spent a dollar.

Then there was Uber.

In 2009 Travis Kalanick offered him a $250,000 stake at a $10 million valuation. Cuban said he would only do it at $5 million. Kalanick walked. That stake would be worth $2.25 billion today.

Cuban said it later on TV. I mean, I have done OK. But still.

He is worth $6 billion. His most expensive lesson was a $250,000 check he never wrote.

[Shevaxgod @shevaxgod]

https://t.co/Z1EE80pMp2

[Mark @MarkGrokLab]

@shevaxgod Appreciate it man.

[Mark @MarkGrokLab]

Warren Buffett said he could guarantee 50 percent a year. The only condition was that you give him less money, not more.

In 1999 he told Business Week: I think I could make you 50 percent a year on $1 million. No, I know I could. I guarantee that.

He was not guessing. He had already done it.

In 1950 he found a small insurance company in Omaha called National American Fire Insurance. The stock traded at $27 a share. The company had earned $29.02 per share the year before. One year of earnings was more than the entire stock price. The book value was $135. He was buying it at 20 cents on the dollar.

Nobody followed the stock. Most holders had bought certificates decades earlier and forgotten about them. Buffett went door to door buying shares from people who did not know what they owned.

In 1951 he found Western Insurance Securities. It had earned $29.09 per share. The stock traded between $3 and $13. He later called it the cheapest stock with the highest margin of safety he had ever seen.

Between 1949 and 1954 he turned $10,000 into more than $100,000. He was in his early twenties.

He bought into Sanborn Map Company in the late 1950s. The stock traded at $45 but the company's investment portfolio alone was worth $65 per share. The market was valuing the actual business at less than zero.

He bought Dempster Mill Manufacturing at $15 to $30 a share when the book value was $75. He eventually owned 70 percent of the company and sold at $80.

These were tiny companies. Nobody on Wall Street was looking at them. That was the entire point.

From 1957 to 1969 his partnership averaged 29.5 percent per year before fees. He started with $105,100. By the time he closed it the fund held $100 million.

Then the money got bigger. And the returns got smaller.

He told the Wall Street Journal in 2009: with tiny sums to invest, it is extraordinary what you can find. Most of the time, big sums are one hell of an anchor.

Berkshire Hathaway is now worth over $1 trillion. Buffett cannot buy a small insurance company in Omaha anymore. He needs entire railroads and energy companies just to move the needle.

The man who built the greatest track record in investing history said the single biggest advantage a small investor has is the one thing he lost along the way. Size.

[Shevaxgod @shevaxgod]

https://t.co/Z1EE80pMp2

[Mark @MarkGrokLab]

@recketino The best problem to have and the one nobody warns you about.

[Mark @MarkGrokLab]

Jack Bogle founded a company that manages $11.6 trillion. He died worth $80 million. He could have been one of the richest people on earth. He designed it so he would not be.

He had his first heart attack at 31. He would have six in total. In 1996 he received a heart transplant at 66.

At Princeton he wrote his senior thesis on the mutual fund industry. Walter Morgan, the founder of Wellington Fund, read it and hired him. By 1970 Bogle was running Wellington. Then he approved a merger that nearly destroyed the company. Assets fell from $2 billion to $480 million. The board fired him in 1974.

After getting fired he started a new company with a structure no one in finance had ever used. The investors owned it. Not the founders. Not Wall Street. The people who put their money in. He called it Vanguard.

Then he created a fund that did not try to beat the market. It just bought every stock in the S&P 500 and held them. No analysts. No stock picking.

On August 31, 1976 he launched the First Index Investment Trust. The underwriters tried to raise $150 million. They got $11 million. Wall Street called it Bogle's Folly.

$10,000 invested in that fund in 1976 is worth $2 million today. Vanguard now manages $11.6 trillion. Its average fee is 0.07 percent. The industry average is 0.44 percent. That gap has saved investors more than $1 trillion.

Warren Buffett said Jack did more for American investors as a whole than any individual he had ever known.

Bogle's core belief was four words. Volatility is not risk.

The market drops 10 percent every year or two. It drops 20 percent every few years. It drops 50 percent once or twice in a lifetime. Those drops are not risk. They are the price of admission.

The real risk is panicking when the price goes down and selling at the bottom. The real risk is paying someone 1 percent a year to pick stocks that usually lose to the index. The real risk is not being in the market at all.

The man who had six heart attacks and launched a fund that Wall Street called a folly never once confused a bad day with a bad investment.

[Shevaxgod @shevaxgod]

https://t.co/Z1EE80pMp2

[Mark @MarkGrokLab]

@gridbreak_ Nobody talks about borrowing $4,000 from your dad after running a hedge fund. That's the part that actually built Bridgewater, not the comeback, but the ego that had to die first.

[Mark @MarkGrokLab]

Ray Dalio ran the largest hedge fund in the world with exactly one employee. Himself.

That's what he was down to in 1982, after he went on TV and predicted a depression. He was so confident he said it publicly. The depression never came. The market did the opposite, an 18-year bull run. He lost everything. Had to fire his whole team and borrow $4,000 from his dad just to pay the bills.

He called it a blow to the head with a baseball bat. Then he called it the best thing that ever happened to him.

Here's why. He stopped asking "am I right" and started asking "how do I know I'm right." That one shift became the entire operating system of Bridgewater. Every opinion weighted by track record, not title. Every meeting recorded. Every disagreement pushed into the open.

He built an app where employees rate each other in real time during meetings, on a scale of 1 to 10, and everyone sees every score.

A 24-year-old employee, fresh out of college, once rated Dalio a 3 out of 10 in a meeting. In front of everyone.

He didn't fire her. He put the rating in a TED talk and told the world.

Today Bridgewater manages $92 billion. Dalio is worth $18.9 billion.

The man who lost everything because he was sure he was right built an empire by making sure he'd never be that sure again.

[Shevaxgod @shevaxgod]

https://t.co/Z1EE80pMp2

[Mark @MarkGrokLab]

@verumxbt That's the move though. He didn't kill the certainty, he gave it rules. The system is just his confidence with a leash on it.

[Mark @MarkGrokLab]

Warren Buffett spent $1.3 billion on Coca-Cola stock. Today that position pays $848 million per year in dividends. He has never sold a single share.

He was born in Omaha, Nebraska. At six years old he was selling Coca-Cola bottles door to door for a few cents of profit each. At 11 he bought his first stock. Three shares of Cities Service Preferred at $38.25 each.

The stock dropped to $27. His sister reminded him every day that he was losing her money. When it recovered to $40 he sold. Total profit: $5 per share.

The stock later hit $202.

He went to Columbia Business School. Studied under Benjamin Graham, the father of value investing. In 1956 he started the Buffett Partnership in Omaha with $100,000. Over 13 years it compounded at 31 percent annually.

In 1962 he started buying shares of a failing textile company in New England. The stock was $7.50 per share. The company was called Berkshire Hathaway.

He wound down the textile operations. Started buying other businesses. Insurance companies. Candy shops. Newspapers. Furniture stores. He turned a dying textile company into a holding company for everything he wanted to own.

In the fall of 1988 he started buying Coca-Cola. Over the next year he spent $1.3 billion. It was the largest position Berkshire had ever taken.

After multiple stock splits Berkshire now owns 400 million shares worth $35 billion. The position pays $848 million per year in dividends. That is a 65 percent annual return on the original investment from dividends alone.

In August 2011 he called the CEO of Bank of America. The stock was collapsing. He offered $5 billion in preferred shares and got warrants to buy 700 million common shares at $7.14 each. The deal took one day. When he exercised the warrants in 2017 the shares were worth $17 billion. Profit on the warrants alone: $12 billion.

He tells students to imagine they have a punch card with 20 slots. Every investment punches a hole. When the card is full you are done for life. He said from those 20 investments, maybe three or five would make you rich.

In July 1991 Bill Gates met Buffett for the first time. Gates did not want to go. His mother had invited Buffett to a family dinner. Gates thought investing was parasitic. They talked for hours. Gates later said Buffett asked amazingly good questions nobody had ever asked him.

A single share of Berkshire Hathaway that cost $7.50 in 1962 is worth $759,350 today. Forbes puts Buffett's net worth at $145 billion.

The man who has been investing for 84 years did not build a $145 billion fortune by finding more opportunities than everyone else. He built it by having the discipline to ignore almost all of them.

[Mark @MarkGrokLab]

@verumxbt That $5 profit probably taught him more than Columbia did. He never sold Coca Cola.

[Mark @MarkGrokLab]

Warren Buffett spent $1.3 billion on Coca-Cola stock. Today that position pays $848 million per year in dividends. He has never sold a single share.

He was born in Omaha, Nebraska. At six years old he was selling Coca-Cola bottles door to door for a few cents of profit each. At 11 he bought his first stock. Three shares of Cities Service Preferred at $38.25 each.

The stock dropped to $27. His sister reminded him every day that he was losing her money. When it recovered to $40 he sold. Total profit: $5 per share.

The stock later hit $202.

He went to Columbia Business School. Studied under Benjamin Graham, the father of value investing. In 1956 he started the Buffett Partnership in Omaha with $100,000. Over 13 years it compounded at 31 percent annually.

In 1962 he started buying shares of a failing textile company in New England. The stock was $7.50 per share. The company was called Berkshire Hathaway.

He wound down the textile operations. Started buying other businesses. Insurance companies. Candy shops. Newspapers. Furniture stores. He turned a dying textile company into a holding company for everything he wanted to own.

In the fall of 1988 he started buying Coca-Cola. Over the next year he spent $1.3 billion. It was the largest position Berkshire had ever taken.

After multiple stock splits Berkshire now owns 400 million shares worth $35 billion. The position pays $848 million per year in dividends. That is a 65 percent annual return on the original investment from dividends alone.

In August 2011 he called the CEO of Bank of America. The stock was collapsing. He offered $5 billion in preferred shares and got warrants to buy 700 million common shares at $7.14 each. The deal took one day. When he exercised the warrants in 2017 the shares were worth $17 billion. Profit on the warrants alone: $12 billion.

He tells students to imagine they have a punch card with 20 slots. Every investment punches a hole. When the card is full you are done for life. He said from those 20 investments, maybe three or five would make you rich.

In July 1991 Bill Gates met Buffett for the first time. Gates did not want to go. His mother had invited Buffett to a family dinner. Gates thought investing was parasitic. They talked for hours. Gates later said Buffett asked amazingly good questions nobody had ever asked him.

A single share of Berkshire Hathaway that cost $7.50 in 1962 is worth $759,350 today. Forbes puts Buffett's net worth at $145 billion.

The man who has been investing for 84 years did not build a $145 billion fortune by finding more opportunities than everyone else. He built it by having the discipline to ignore almost all of them.

[Shevaxgod @shevaxgod]

https://t.co/Z1EE80pMp2

[Mark @MarkGrokLab]

Elon Musk put $100 million into rockets. Three of them exploded. Then he stood in front of USC graduates and said success is simple math.

He walked away from PayPal with $175 million. Most people would have stopped. He put $100 million into SpaceX, most of what was left into Tesla, and kept nothing for himself.

The first Falcon 1 failed on March 24, 2006. A corroded fuel line. The second failed on March 21, 2007. A staging error. The third failed on August 3, 2008. Residual thrust from the first stage slammed into the second.

Three rockets. Three years. $100 million burning on a launchpad.

Tesla was dying at the same time. General Motors had filed for bankruptcy. Nobody was writing checks for electric cars.

On September 28, 2008, the fourth Falcon 1 reached orbit. SpaceX became the first privately funded company to put a liquid-fueled rocket into Earth orbit. NASA followed with a $1.6 billion contract.

But Tesla still had no money. The financing round closed at 6pm on December 24, 2008. Last hour of the last possible day. If it had not closed, payroll would have bounced two days later. Musk put in his last cash. He did not own a house. He had nothing left to sell.

Then in May 2014 he stood in front of business school graduates at USC and told them what he had learned.

Work every waking hour. If someone else works 50 hours a week and you work 100, you will get twice as much done in a year. Focus on signal over noise. Stop spending time on things that do not make the product better. And take risks now, because it only gets harder.

He did not talk about vision. He did not talk about changing the world. He talked about math. Hours, output, and the discipline to cut everything that does not matter.

The man who nearly lost two companies in the same year told a room full of graduates that success is not about talent. It is about how many hours you are willing to put into something everyone else thinks is going to fail.

[Mark @MarkGrokLab]

@antonyo00798 And nobody in that room knew. The entire future of electric cars was sitting in a wire transfer on december 24th.

[Mark @MarkGrokLab]

Elon Musk put $100 million into rockets. Three of them exploded. Then he stood in front of USC graduates and said success is simple math.

He walked away from PayPal with $175 million. Most people would have stopped. He put $100 million into SpaceX, most of what was left into Tesla, and kept nothing for himself.

The first Falcon 1 failed on March 24, 2006. A corroded fuel line. The second failed on March 21, 2007. A staging error. The third failed on August 3, 2008. Residual thrust from the first stage slammed into the second.

Three rockets. Three years. $100 million burning on a launchpad.

Tesla was dying at the same time. General Motors had filed for bankruptcy. Nobody was writing checks for electric cars.

On September 28, 2008, the fourth Falcon 1 reached orbit. SpaceX became the first privately funded company to put a liquid-fueled rocket into Earth orbit. NASA followed with a $1.6 billion contract.

But Tesla still had no money. The financing round closed at 6pm on December 24, 2008. Last hour of the last possible day. If it had not closed, payroll would have bounced two days later. Musk put in his last cash. He did not own a house. He had nothing left to sell.

Then in May 2014 he stood in front of business school graduates at USC and told them what he had learned.

Work every waking hour. If someone else works 50 hours a week and you work 100, you will get twice as much done in a year. Focus on signal over noise. Stop spending time on things that do not make the product better. And take risks now, because it only gets harder.

He did not talk about vision. He did not talk about changing the world. He talked about math. Hours, output, and the discipline to cut everything that does not matter.

The man who nearly lost two companies in the same year told a room full of graduates that success is not about talent. It is about how many hours you are willing to put into something everyone else thinks is going to fail.

[Shevaxgod @shevaxgod]

https://t.co/Z1EE80pMp2

[Mark @MarkGrokLab]

@shevaxgod Crazy is what it looks like from the outside. From the inside it was just math he trusted more than everyone else's doubt.

[Mark @MarkGrokLab]

Banks laughed when John Paulson bet against the housing market. One year later his fund made $15 billion. He personally took home $4 billion. They call it the greatest trade in history.

He grew up in Queens, New York. Went to NYU. Graduated valedictorian. Summa cum laude. Got into Harvard Business School and graduated in the top 5 percent of his class.

He worked at Boston Consulting Group. Then Bear Stearns. Then a series of smaller firms. In 1994 he started his own fund with $2 million and one employee.

By 2003 Paulson & Co. managed $300 million. Respectable. But nobody on Wall Street knew his name.

Then a man named Paolo Pellegrini walked into his office looking for a job. Pellegrini had been fired, divorced, and was nearly broke. Paulson hired him.

Pellegrini started studying housing prices. He found something nobody else had seen. For decades home prices in the United States had grown at 1.4 percent per year. Between 2000 and 2005 they were growing at 7 percent per year.

The entire housing market was a bubble. And Wall Street was selling insurance against its collapse for almost nothing.

Paulson bought $25 billion worth of credit default swaps on the lowest-rated mortgage bonds. The swaps cost 1 percent per year. If housing held, he would lose the premiums. If it collapsed, the payout would be historic.

He went to the banks. Goldman Sachs. Deutsche Bank. Bear Stearns. They sold him the swaps and thought he was throwing money away. Nobody believed housing could fall nationwide. It had not happened since the Great Depression.

For over a year the trade bled money. His investors questioned him. The market kept going up.

Then in 2007 it broke. Subprime lenders started collapsing. Bear Stearns shut down two hedge funds. The mortgage bonds Paulson had bet against went to zero.

His Credit Opportunities Fund returned 590 percent in a single year. The fund made $15 billion in 2007. Another $5 billion between 2008 and 2009. Total: $20 billion.

Paulson personally earned $4 billion in 2007. The largest single-year payday in hedge fund history at the time.

Forbes puts his net worth at $4 billion. The man who started with $2 million and one employee made the greatest trade in financial history because he found the one person who did the math nobody else bothered to do.

[Mark @MarkGrokLab]

@HeroOkMan Clean. And the banks literally sold him the weapon he used against them.

[Mark @MarkGrokLab]

Banks laughed when John Paulson bet against the housing market. One year later his fund made $15 billion. He personally took home $4 billion. They call it the greatest trade in history.

He grew up in Queens, New York. Went to NYU. Graduated valedictorian. Summa cum laude. Got into Harvard Business School and graduated in the top 5 percent of his class.

He worked at Boston Consulting Group. Then Bear Stearns. Then a series of smaller firms. In 1994 he started his own fund with $2 million and one employee.

By 2003 Paulson & Co. managed $300 million. Respectable. But nobody on Wall Street knew his name.

Then a man named Paolo Pellegrini walked into his office looking for a job. Pellegrini had been fired, divorced, and was nearly broke. Paulson hired him.

Pellegrini started studying housing prices. He found something nobody else had seen. For decades home prices in the United States had grown at 1.4 percent per year. Between 2000 and 2005 they were growing at 7 percent per year.

The entire housing market was a bubble. And Wall Street was selling insurance against its collapse for almost nothing.

Paulson bought $25 billion worth of credit default swaps on the lowest-rated mortgage bonds. The swaps cost 1 percent per year. If housing held, he would lose the premiums. If it collapsed, the payout would be historic.

He went to the banks. Goldman Sachs. Deutsche Bank. Bear Stearns. They sold him the swaps and thought he was throwing money away. Nobody believed housing could fall nationwide. It had not happened since the Great Depression.

For over a year the trade bled money. His investors questioned him. The market kept going up.

Then in 2007 it broke. Subprime lenders started collapsing. Bear Stearns shut down two hedge funds. The mortgage bonds Paulson had bet against went to zero.

His Credit Opportunities Fund returned 590 percent in a single year. The fund made $15 billion in 2007. Another $5 billion between 2008 and 2009. Total: $20 billion.

Paulson personally earned $4 billion in 2007. The largest single-year payday in hedge fund history at the time.

Forbes puts his net worth at $4 billion. The man who started with $2 million and one employee made the greatest trade in financial history because he found the one person who did the math nobody else bothered to do.

[Shevaxgod @shevaxgod]

https://t.co/Z1EE80pMp2