So, you've hit the big time – maybe you're a chart-topping artist, a slam-dunking athlete, or a breakout star on the silver screen. The world is your oyster, and suddenly, investment opportunities are flooding in. But before you jump headfirst into that trendy restaurant, that edgy clothing line, or yes, even that cool music label, billionaire investor Mark Cuban has a blunt message for you: "That is the death!"
Speaking with the ever-insightful Shannon Sharpe on the "Club Shay Shay" podcast, the seasoned entrepreneur didn't sugarcoat his advice for those who suddenly find themselves swimming in cash. Forget the glitz and glamour, Cuban warns against these seemingly natural extensions of fame. Why? Because, according to him, these industries often lack a crucial element: "no barriers to entry."
Think about it. While the allure of owning a piece of the entertainment or fashion world is strong, Cuban, a man who knows a thing or two about building a fortune, points out a fundamental flaw. Industries like clothing, restaurants, and liquor are "too easy to enter." And what happens when everyone can play? The playing field gets crowded, pricing power dwindles, and profitability takes a nosedive. Indeed reports suggest the average profit margin for a full-service restaurant hovers around a mere 3% to 5%.
Cuban's core advice for those with newfound wealth? Hire someone who knows how to manage it – and no, it can't be your buddy. It needs to be someone with a proven track record of handling significant sums for high-net-worth individuals. Navigating the complexities of smart investing often requires professional expertise to identify promising opportunities and steer clear of common pitfalls.
So, if not the flashy side hustles, then what does Cuban recommend for steady gains? Prepare for a dose of the unglamorous: boring businesses.
Industries that don't exactly scream red carpets and magazine covers can actually be goldmines simply because they lack broad appeal. Few kids dream of running a waste disposal firm or a pest control service, but Cuban would likely nod in agreement that these sectors can be surprisingly lucrative for those willing to forgo the bragging rights.
Legendary investor Warren Buffett has built an empire by betting on these "boring" but reliable businesses. His portfolio, as of Q3 2024, reportedly includes companies in insurance and kidney treatment – hardly the stuff of Hollywood parties, but undeniably profitable. The logic? Low competition and consistent demand can lead to steady, long-term growth.
For those intrigued by these overlooked opportunities, platforms like Moby, an investment research service led by former hedge fund analysts, aim to provide the insights needed to tap into these sectors, highlighting the profitability often found in logistics, utilities, energy, or enterprise software.
But the "boring" route isn't the only alternative Cuban might endorse for steady gains. He might also point towards the tangible stability of real estate.
Real estate, whether it's residential, commercial, or niche properties, has a track record of offering long-term income generation and acting as a solid hedge against inflation. Even during volatile economic times, well-chosen real estate tends to hold its value. Companies like First National Realty Partners (FNRP), specializing in grocery-anchored retail (a sector known for its resilience), offer accredited investors access to this market, managing everything from property acquisition to management.
Beyond traditional assets, Cuban might also acknowledge the growing appeal of artwork as an alternative investment. Historically, fine art has shown resilience during market downturns and the potential for strong returns. Platforms like Masterworks are even democratizing this once ultra-exclusive market by fractionalizing ownership of iconic pieces, making art investing accessible to a wider range of investors.
And finally, for a truly time-tested store of value, there's gold. For centuries, this precious metal has been a go-to during economic uncertainty, acting as a hedge against inflation and market volatility. Companies like American Hartford Gold offer ways to incorporate gold and silver into investment portfolios, including Gold IRAs for retirement savings.
So, while the allure of a celebrity-backed clothing line or a musician-owned restaurant might be strong, Mark Cuban's advice is clear: for lasting wealth, look beyond the glitz and glamour. Embrace the "boring," consider real estate, explore alternative assets like art, and don't underestimate the enduring value of gold.
