Kevin O'Leary Answers Investor Questions | Tech Support | WIRED

About this video

• Video Title: Kevin O'Leary Answers Investor Questions | Tech Support | WIRED
• Channel: WIRED
• Speakers: Kevin O'Leary
• Duration: 00:15:30

Overview

In this video, Kevin O'Leary, also known as "Mr. Wonderful," answers a variety of investment and financial questions submitted by viewers. He covers topics ranging from basic investing strategies and emergency funds to specific company stocks, cryptocurrency, and the nature of market corrections. The video aims to provide accessible financial advice and insights from his experience on "Shark Tank" and as an investor.

Key takeaways

• VOO (Vanguard S&P 500 ETF) is a viable and recommended investment strategy, offering a low-cost way to invest in the S&P 500, suitable for a "chill" approach.
• Market timing is not a viable strategy, and attempting to do so can lead to losses; it's advised to stop trying decades ago.
• Paying off high-interest debt (e.g., credit cards with 21-23% interest) is a priority over building a starter emergency fund, as the guaranteed return of avoiding interest is difficult to match.
• Starting to invest is easiest through apps, by setting aside 10-15% of your salary monthly and having the app automatically invest it into ETFs or a mix of ETFs and bonds.
• Palantir's valuation is a subject of debate, but its focus on data, which fuels AI, positions it in a currently strong sector.
• Bitcoin investment is a personal choice, and while O'Leary believes in crypto and digital payments, he advises against putting more than 20% into any single sector, including crypto.
• Diversification is crucial, with a rule of no more than 20% in any sector, 5% in any single stock or bond.
• AI is not necessarily a bubble, as technology often proves its value over time, driving productivity and innovation across various sectors.
• Tesla is more than an electric car company, it's also a data, robotics, and energy company with a focus on autonomous driving, representing a bet on the future.
• Shorting stocks is very risky due to potentially unlimited losses and is generally advised against unless one has deep expertise.
• The best "Shark Tank" products are not known immediately, as it takes years to identify successful investments; diversification is key.
• Gold can be a part of a portfolio (around 5%), but heavy investment is not recommended; both ETFs and physical bullion are options, with the latter incurring storage costs.
• Day trading is possible but extremely difficult, requiring full-time dedication and with a majority of traders losing money.
• Compound interest is powerful and was recognized early on, allowing money to double roughly every seven years.
• ETFs are generally preferred over mutual funds due to lower fees and better tax efficiency, especially for shorter time spans.
• Picking individual stocks is discouraged for most investors, as beating the market index is incredibly difficult, and investing in broad-market ETFs is a more reliable strategy.
• Dividend stocks can be worthwhile if paid from operating free cash flow, indicating a company's profitability.
• Hedge funds employ managers who can invest in various assets and strategies, typically charging fees and taking a percentage of gains (often 2% management fee and 20% of profits).
• Investing in startups is risky with a high failure rate, but successful ones can yield significant returns; crowdfunding platforms can help diversify startup investments.
• Market corrections are natural but unpredictable, and while volatility exists, long-term investment in the S&P 500 has historically yielded positive returns.
• International funds are logical for diversification, as geographic diversification can capture different market performances.
• Small and medium-cap funds can outperform large caps under certain conditions, as smaller companies have higher growth potential.
• For a 22-year-old, a portfolio allocation of 70% stocks and 30% bonds is a reasonable starting point, with the bond percentage increasing with age.
• It's impossible to perfectly time selling investments, but a key discipline is rebalancing the portfolio to maintain diversification, selling assets that grow beyond 5% of the total.
• Kevin O'Leary ("Mr. Wonderful") is considered by some to be the shark who cares most about his investments' success, and he values entrepreneurs who can pivot.