Hold “If You Can Afford To,” Billionaire Mark Cuban Tells GameStop Shareholders

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by Tyler Durden
Tuesday, Feb 02, 2021 - 03:30 PM

Billionaire Mark Cuban is telling scores of clueless retail investors to 'hodl' their GameStop "if they can afford to". 

Cuban, best known for his role on Shark Tank, besting the SEC years ago and owning the Dallas Mavericks, took to a Reddit message board to do an "Ask Me Anything (AMA)" for the WallStreetBets crowd, many of whom spent the morning on Tuesday complaining on the message board that their positions in GameStop are getting trounced. 

“If you can afford to hold the stock, you hold. I don’t own it, but that’s what I would do,” were Cuban's words of wisdom to Reddit users, while GameStop stock plunged in the background. 

Cuban also offered advice on switching brokers, writing: “Pick the brokerage with the strongest balance sheet. What ruined it on RH is that they didn’t have enough cash to deal with the growth in accounts, margin loans and volatility. The EXACT SAME THING will happen at the next broker if you don’t make sure they have aMULTI-TRILLION dollar balance sheet to be able to handle these kind of circumstances.”

He continued: “The only question is what broker do you use. Do you stay with RH, who is going to have the same liquidity problems over and over again, or do you as a group find a broker with a far, far, far better balance sheet that won’t cut you off and then go ham on Wall Street.”

After admitting he had "no idea" what was going to happen next, he then joined the crowd in blaming short sellers, stating: “I have no idea. No one really does. I do think that once RH and others open up buying some of these will pop up. I just don’t know how much or if it will happen for sure. I think the stocks are getting shorted because the shorts know that the natural buyers, the folks on RH and others like it are being prevented from buying, so that will make it most likely the stock will go down.”

He opined further on shorting, and naked shorting, stating: “I actually love to see the companies I own shorted. If it’s a company I want to own, I know the shorts can be squeezed and if the company does really, really well, then the shorts will have to cover, creating more demand for the stock of the company I own, pushing the stock price up.”

He continued: “As far as naked shorting, that’s not really a thing. Yes there can be more shares shorted than there are original float. That is by design. If I borrow a stock from you to short, and when I short it and your buddy buys it, then they can loan it to someone else to short, etc. All of those people who borrowed the stock paid to do so, and they realize that if enough people buy the stock and ask for the shares, they will get called in. So the chain of custody is there. The systems is doing what its designed to do.”

Cuban also had some harsh words for the SEC, who he called "a mess": “The SEC is a mess. I wouldn’t trust them to do the right thing ever. It’s an agency built by and for lawyers to be lawyers and win cases rather than do the right thing."

"If the SEC cared about anyone “other than Wall Street you would be able to go there right now and read bright line guidelines about insider trading, shorting, what is a pump and dump, what are the rules for cutting off the purchase of stocks like happened with GME et al,” he later wrote. 

He left the bagholders discussion participants with his final two pieces of advice: “I learned some expensive lessons when I first started trading stocks. It was painful. But I tried to learn what I got right and wrong. Right now, right here. The game is changing. The hard part is ask yourself if what you believed in has actually changed.”

Cuban continued: “When I buy a stock I make sure I know why I’m buying it. Then I HOLD until I learn that something has changed. The price may go up or down, but if I still believe in the logic that made me buy the asset, I don’t sell. If something changed that I didn’t expect, then I look at selling."

Finally, he gave his most realistic answer, commenting on what kind of recourse Robinhood users would likely get from a class action lawsuit:

“Yes. There will be class action suits. And you will win. And after legal fees you will get your $4.00 settlement check.”