More Required Reading: Mark Cuban's Blog

Mark Cuban provides a rare voice in today's "ironic" business settings. Whenever and wherever "group think" and the "wisdom of crouds" arise to save us from lone innovators and entrepreneurs, Mark steps forth to remind us that logic, rugged independence, service, and hard work are yet the true founts of enduring wealth.

Cuban provides a rare voice in today's "ironic" business settings--he shoots from the hip and tells it like it is. And he gets it right--Digital Rights Management is important for the innovator--from the lone documentarian to the major studio.

And thus, like Homer's Odyssey and John Bogle's Battle for The Soul of Capitalism, Cuban's blog is required reading in my AE&T class.

Both Cuban and Bogle call the Wall Street bluff in their works, and Cuban gives great advice on investing: your best investment is yourself--your pasions and dreams.

MARK CUBAN ON WALL STREET/INVESTING:

"So what to do if you want to invest your money? What to do if you want to end this year with more than you started with?

Simple, avoid risk.

Risk is what Wall Street lies about every day. Risk is what they try to sweep under the covers knowing that we all are addicted to the dream of financial freedom. Risk is the poison that is masked by the commercials.

When you see a commercial for a brokerage, they are telling you in a very subtle way that they remove risk. Invest with them and the risks regarding investing that you have heard about will be reduced or eliminated because they are so smart. All of which they say before they rush through all the disclaimers that confirm that everything they just said is nonsense, that they cant really avoid risk.' " --Mark Cuban

And here is some invaluable advice that forms the center and circumference of AE&T:

"3. Invest in yourself. Do the things that can get you closer to your goals and dreams. It won't come from a brokerage commercial. It will come from preparing yourself, working hard, and standing apart from your competition. You Inc. is the best stock you can ever buy... if you are willing to do the work." --Mark Cuban

When you buy a stock, or sock money away in bank, you are generally giving someone else your capital to follow their dreams. Do you really think that their dreams are more important, better, and more worthy of fulfillment than yours?

And all too often these days, when you buy a stock or invest in a mutual fund, you are funding scandals and deceit--you're funding Wall Street marketing schemes that never tell of that simple reality--Wall Street is a negative-sum game. In every transaction, there is a buyer, a seller, and an intermediary who gets a cut. Thus Wall Street loves the daily churn, as that's how the house makes its money. There is one underlying theme in all their machinations--they transfer the wealth to themselves and the risk to you.

John Bogle, the founder of the $700 billion Vanguard Fund and the classic Wall Street innovator wrote,

"That’s the substance of The Battle, so now for a little background. As I mentioned at the outset of my remarks this evening, many of the ideas in my book are consistent with the ideas of some of our best and brightest economic thinkers. My central criticism about investment management, for example, is that a huge portion of the $400 billion that our financial system consumes each year is a dead-weight drag on the returns earned by investors as a group. After all, when we deduct from the gross returns produced in the stock market, the costs that we pay to our investment intermediaries, we investors actually receive only what remains. We investors dine, in fact, at the bottom of the financial food chain. It’s pretty simple, and it’s incontrovertible."

Cuban provides the wisest of all advice--call the bluff, and invest in your own ventures and dreams.

Warren Buffett gives us practially the same advice--invest in those businesses that you yourself can understand. And since we'll never know anyone else's business better than our own, entrepreneurship is the best investment one can make.

Your artistic and entrepreneurial endeavors are superior to the Wall Street Casino--which Bogle, Buffett, and Cuban all lament, as does Lord Keynes.

In his classic The Wall Street Casino, Bogle writes, "Today's stock trading frenzy ill serves the investor. It brings to mind Lord Keynes's warning that ''when the capital development of a country becomes a byproduct of the activities of a casino, the job is likely to be ill-done.'' Investors who stay out of the casino and hold stocks for the long term stand the best chance that their own job of capital accumulation will be well done."

Warren Buffett says, "Risk comes from not knowing what you're doing," and sending your money off to some mutual fund who invests it goodness knows what, and takes a cut, and commissions, and fees, and pays taxes on the churn, constitutes "not knowing what your're doing."

Cuban writes, "If you play poker, you are playing against the other players, and the house only takes its commission. Just like your broker takes its commission. Unlike the stockmarket, you know the rules exactly. You know without question, the house is going to play by the rules. The gaming commission appears to actually enforce rules of play, unlike the SEC. And then there are sports bets. Like any other investment or bet, the question always come down to whether there is good information available, who knows how to use it better, and who is the competition and are they smart or not. Honestly, I don't know if the best and brightest go to Wall Street or Vegas. I don't know the number of gamblers via sports books in vegas vs the the number of gamblers, I mean investors, in the stockmarket."
For while Wall Street is a zero or negative-sum game, your passions and dreams are capable of vast returns. Starting with little or nothing, you can create a lasting work of art--a song, a symphony, a film, a book--something with eteral life--or a humble venture that actually serves customers with a useful product.

Why send your hard-earned money to distant MBAs so they can play negative-sum games trading stocks of suspect companies that are making up the accounting rulse as they go along, all the while placing the lion's share of the risk on you, while granting themselves the lion's share of the rewards?

Also, Cuban echoes the underlying premise of Arts Entreprenuership & Technology--as your passions and dreams are yoru most valuable assets, sweat equity is the most valuable equity there is:

MARK CUBAN ON BOOTSTRAPPING: Rule #1: Sweat Equity is the best start up capital.
"The best businesses in recent entrepreneurial history are those that have been started with little or no money. Dell Computer, MicroSoft, Apple, HP and tens of thousands of others started in dorm rooms, tiny offices or garages. There weren't 100 page long business plans. In all of my businesses, I started by putting together spreadsheets of my expenses, which allowed me to calculate how much revenue I needed to break even and keep the lights on in my office and my apartment. I wrote overviews of what I was selling, why I thought the business made sense, an overview of my competition and why my product and/or service would be important to my customers, and why they should buy or use it. All of it on a piece of yellow paper or in a word processing file, and none of it cost me more than the diet soda I was drinking while I was writing it up." --Mark Cuban

MARK CUBAN ON THE FUTURE OF HOLLYWOOD: Coming soon . . .

MARK CUBAN ON DIGITAL RIGHTS MANAGEMENT: "Property owners have every right to do whatever they think is necessary to protect their property. Homeowners can build walls and add security. Content owners can add copy protection schemes to their digital content.

Unfortunately for content owners, digital rights/copy protection schemes have always proven crackable. No matter how smart the good guys think their programmers are, the bad guys have programmers that are just as smart. More importantly, the good guys have to build the perfect protection scheme, impenatrable by any of infinite number of possible attacks. The bad guys only have to find out where the good guys screwed up. Its a lot easier to be the bad guys and crack the copy protection. Which is exactly why every effort to fully protect digital content has failed."

So check Mark's blog out.