Mark Cuban: stock market is probably the worst investment

[GeorgeF]

First if you are 22 the best investment is yourself. At 22 your most important investment is in your future salary and spouse. Get those two right and it does not matter where the S&P ends up (and I am not being sentimental, I mean money wise).

As to stocks vs bonds, which ends up best has alot to do with where they begin. In the past betting on stocks when they yeild little or nothing has not been a good strategy.

[adios]

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how can getting a guaranteed negative real rate of return be correct?

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Don't follow this one i.e. are you stating that bonds offer a negative real rate of return?

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I'm not looking at any literature, going off the top of my head, but i dont believe there is a period in the US where bonds have outperfromed stocks in any 20 year period.

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I'm fairly certain that from 1929-1949 bonds outperformed stocks but I'll check it out to make sure.

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However, many experts seem to believe that this premium between stocks and bonds is going to be diminished over the next 20 years.

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Most data comparing stocks and bond returns start from 1926. It's a relatively short period of time and not a lot of data to crunch in reality. The Capital Asset Pricing Model shows that the equity risk premium is not justified when historical data indicates a 5.5% premium over bonds. I think this is the basis for such beliefs.

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Regardless, how any1 could seriously take this advice that investing in the bank is the proper thing to do is beyond me.

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I took the article to mean that stocks won't pay the risk premium that people expect. Also my take on what Cuban said was that buying individual stocks is probably not the wisest move for most investors. Savings accounts are probably close to break even on a real rate of return so maybe that's what you're referring to in the first statement I quoted.

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I'm 22 years old, planning on investing for another 45 years or so. Over the next 45 years, i am 100% convinced that i will outperform any1 investing dollar for dollar in their bank than if i would invest in the S&P.

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How about bonds though? That's one of the real issues in my mind. The other real issue in my mind is your investment "strategy." Are you going to make periodic buys at a constant rate, are you putting in a lump sum and waiting 45 years, are you buying individual stocks, or just the S&P?