Wednesday, August 25, 2010

Mark Cuban's Non-Probabilistic Thinking

His investment advice today is to pay off high interest debt, save your money in cash, and try to cut personal spending. Fair enough. But then he makes the outrageous claim that "If you have under 100k dollars in liquid assets, your net worth will be higher in one year if you follow this advice than if you follow ANY other investment advice any broker or banker will give you this year."

The likelihood of this claim proving true is vanishingly small. Out of all of the other pieces of investment advice proffered, surely some of these will beat the null strategy of playing it safe. Now, Cuban might argue that you can't identify which advice will allow you to beat the null a priori, and so you're better off not trying, but that's a totally different claim.

Bottom line: Cuban's blog gets demoted from "medium" to "low" priority on the Google reader hierarchy, and is now teetering on the edge of unsubscribe territory.