Kevin O'Leary Answers Investor Questions

Hey, Mr. Wonderful here,

and I'm here to answer your questions from the internet.

This is Investor Support, and here we go.

[upbeat music]

This is LorgePorpoise, okay.

Is VOO and chill, a viable strategy?

VOO is one of the least expensive ways to invest

in the S&P 500.

These are called ETF, Exchange Traded Funds,

and it's a very good vehicle and frankly,

yeah, it is a good way to chill.

Broncobroncobronco...

What kind of a name is this, broncobroncobronco?

What are you, Bozo Bronco?

Why do so many people say, 'You can't time the market,'

when you can?

That's not true, Bronco.

Nobody can time the market.

Everybody tries, you cannot time the market.

I stopped trying to do that decades ago.

I got my heinie spanked, as you will broncobroncobronco,

it's gonna happen to you.

Here's one from Professional_Soft258.

Should I make a starter emergency fund or pay off debts?

You gotta pay it off.

If you know you're being charged 21% interest

on a credit card, something as high as 23%,

you're outta your frigging mind if you don't pay that off.

I can't make 23% a year, either can you?

It's really hard to do that.

All right, next on the hit parade, gentrycourt2121.

How do I get started investing for the very first time?

You gotta use an app, it's the easiest way to do it.

If you're just starting out and your salary

is 68,000 a year, that's the average salary in America.

You download it on your phone, you decide I'm gonna keep

10 to 15% of my salary each month.

The app is gonna take it out of my bank account

and just put it into an ETF in the market

or a mixture of ETF and bonds,

which you can set it up that way.

Rezwenn asks, Palantir may be the most overvalued firm

of all time.

You could have said that about Apple.

You could have said that about Amazon.

You could have said that about Netflix.

There's so many companies that you think are overvalued,

but over time prove out their growth objectives.

Palantir is about data, and data is the new oil,

and they were the first to go this way

and help both governments and companies mine their data,

become more efficient, more productive, more profitable.

So are they overvalued?

Only time will tell.

So far, it's been just killing it

because data is really important,

and data is what drives AI.

So they're in the right space right now,

that's why it's been performing so well.

Here we have one from kaloostian,

Everyone investing in Bitcoin.

What exactly are you investing in?

Hype, technology, adoption?

What makes it a good investment?

Because I'm not convinced.

So listen, you don't have to invest in Bitcoin,

no one's forcing you to do that.

I do invest in Bitcoin 'cause I'm a believer in crypto

and a believer in digital payment systems over time.

I have a general rule that you think about.

Don't put the farm onto any one stock.

In other words, don't bet everything ever.

So my diversification strategy was taught to me

by my mother.

Never more than 20% in anyone's sector, including crypto.

Never more than 5% in any one's stock or bond.

Now, we have 11 sectors in the S&P including real estate,

which was recently added, it's the most recent.

Crypto is not yet a sector,

but I believe it'll become the 12th,

probably within five years

because it's being legitimized through policy.

All right, here's a question from Illustrious-Stock3068,

What do you think the overall return on investment

for 'Shark Tank' is?

Well, nobody really knows for sure

because there's guest sharks, the regular sharks,

and nobody really puts together all the data.

But here's what we do know, it's been on for 17 years.

Something's working out.

Entrepreneurs keep coming every year

because it does a phenomenal job in helping them launch

their businesses, create jobs in America,

sell millions of dollars with the product and services.

And the sharks have done quite well,

otherwise, we wouldn't come back either.

RjInvesting asks, How long until average investors realize

AI is a bubble that will never pay off?

Yeah, they said that about the internet too back in 1990.

Wrong, technology has a nasty way of being right sometimes

and certainly AI is creating a lot of excitement

about productivity, margin enhancement,

customer acquisition cost, doing a lot of robotics,

working on all kinds of new technologies

that we never even thought about,

changing how movies are made, you name it,

it's starting to affect every sector of the S&P 500.

So I'm not sure it's a bubble, time will tell.

Big-Phase7911, love that name.

Does anyone, absolutely anyone think that Tesla stock

will go back up to its peak?

When you're buying Tesla, you're buying more

than electric car company.

You're buying a data company,

you're buying robotics company,

you're buying a company that understands energy,

and they have a lot of resolution

in terms of their drive towards autonomous cars.

So you're buying sort of the future.

King J-U-R-G-Z, kingjurgz,

Can someone please explain to me

how short stocks actually work?

Shorting is very risky.

It has unlimited losses

because you're basically selling a stock you don't own,

and you're assuming it's gonna go down,

then you're gonna buy it back.

And you're gonna profit between what you've bought it,

if you shorted at 100, and then if it goes down to 50,

you buy it back and you made $50.

But what happens if it goes to 200?

Oops, you just lost $100.

What happens if it goes to $1,000?

What happens if it goes to $10,000?

That happened in the internet bubble and people got killed.

So I wouldn't short stocks

unless you really know what you're doing.

That's what hedge fund guys do, and very, very risky.

Jobenalexx asks, Which is the best product

that has got an offer on the tank on your perspective?

You know, here's the thing, you just don't know.

You can make the assumption each year when you,

let's say, invest in a dozen deals.

Oh, I think they're all winners,

but that won't be known for at least five to seven years.

Then you're gonna find out which ones win

and which ones lose.

And so sometimes, the craziest deals make the most money.

That's the idea of diversification.

So the ones I've loved, I found out five years later

were monster winners like Basepaws or Wicked Good Cupcakes,

you know, Blue Land, they're all huge winners.

But you don't know out of the gate.

You gotta wait, you have to let them marinate.

Look it rhymes, that's fantastic.

Jimbob994, Why wouldn't I invest heavily in gold?

I wouldn't invest heavily, I have a 5% weight in gold

and whoa, has that ever worked.

Ichihuahua Caramba, I'm so happy with my gold.

Now, I own it two different ways.

The GLD is the ETF, but I like to touch my gold,

so I actually own the bullion.

But when you own the bars, you have to pay for storage.

You're not gonna walk around and put it under your mattress,

you gotta put 'em in a safety deposit vault

and you pay for that.

All right, next on the hit parade, Technical_Bank_6670 asks,

Is being a successful day trader really even possible?

Yes, it is possible, but it's really hard work.

I mean, this is a full-time job.

It's not for me, not something I want to do.

There's a huge community all around the world that do this

and they kind of roam the earth in bans online.

Not easy, and I would say the majority lose money,

but some of them do quite well

because they're really adapted,

figuring out trends or understanding momentum.

But a lot of them are actually trade all day long,

and then go back to cash at night, and go to sleep,

'cause they don't wanna be exposed to the market overnight.

If you think you want a life like that,

you can check it out.

Not for me, thank you.

Electronic_Change380 asks,

When did you realize the power of compound interest?

Almost immediately, when I was taught this,

I think in grade six.

It's pretty frigging cool.

Just leave it there and let it compound,

and grow, and grow, and grow, and grow, and grow.

Basically, you can double your money every seven years.

Just making a few percent, it's incredible.

This is from Slight-Strip-1869, sorry,

Slight-String-1869, crazy name.

High yield savings or invest in mutual funds?

4.5 year time span.

No, not mutual funds.

Fees are high and they're tax inefficient.

ETFs, Exchange Traded Funds,

I would do that with a four and a half year time span.

This is Jumperbumper, TheJumperbumper.

Why do people buy individual stocks instead of funds?

[laughs] If you think you're so good

that you can pick stocks and beat the index, give it a try.

Learn the hard way.

Virtually, no one beats the index, it's so hard.

So what you do is you set yourself up, maybe you put,

I don't know, I'm just telling it, give it...

Make it easy for you, $1,000 into one account

where you're picking stocks and another into the SPY.

That's the SPY index,

the ETF that tracks the entire S&P 500.

And then you find out the hard way, you're not that good.

90% of the time, you can't beat it,

so you might as well join it and stop trying to pick stocks.

I don't pick stocks.

This is a Reddit user asks,

Are dividend stocks ever worth it?

The answer's absolutely yes.

But the right dividend stocks

that you will find a good index called OUSA

that really focuses on those that actually pay dividends

to make sure they're not taking on inordinate debt

to pay the dividend.

You want the dividend paid out of operating free cash flow.

And that's just giving you back some of your profits,

that's all, of course, it's worth it.

Mohnishkarthikeyan04 asks,

What shark do you think has the best ROI?

Oh, there's no question, it's Mr. Wonderful.

Who else could it be?

Thank you for that question.

JannaDD126 asks, What exactly is a hedge fund?

And what does a hedge fund manager do?

So hedge funds are a different beast.

These are managers that usually are allowed to go anywhere,

any geography, any security, and they can go short and long,

which means they can bet against a stock or with a stock.

And they try and beat the market.

Some of them do very well, some of them not so much.

Generally, you wanna look at a five-year track record

of a hedge fund manager.

If they beat a hurdle, let's say 7%,

they take 20% of all the gains above that.

Some of them have no hurdle,

which means they take 20% of any gain.

The point is, you'd always ask what the terms are.

The classic hedge fund is 2 and 20.

2% fees, 20% of any gains.

So investors get 80, the manager gets 20.

Some of them have done very, very well

and some not so much equivalent.

Equivalent-Bluejay asks, How good of an idea

is it to invest into startups

and how do I sift through them?

This is what I do on Shark Tank every day.

I don't invest just one company each season,

sometimes I do a dozen 'cause I don't know

which one's gonna work and either do you.

Startups are tricky, because history tell you about 80% fail

and the 20% that make it pay you back for all your mistakes.

But how many should you have?

I think the magic number is a minimum of seven.

And the way you do that is you go to a crowdfunding site

like StartEngine, and you can look

at all the different deals

and decide how much you're gonna invest in startups,

and pick two, or three, or four, or five,

or six, seven deals, and manage your portfolio that way,

makes it very easy.

BikesOrBeans asks, Does the market need corrections?

A correction is defined by a loss of 20% or more,

or that's an entry into a bear market.

Sometimes because of calamities like pandemics,

you get a lot of volatility.

And yes, they do go up and down, but nobody can time them,

it's impossible to know.

And sometimes, they go up violently,

then they go down violently.

But long term, don't bet against America

because the S&P 500 is provided 8 to 10% returns

for almost 200 years.

Alterna9 asks, Are there any logical arguments

to not invest in international funds?

No, diversification is also geographic.

You can find indices that provide, like those are ETFs,

that will help you invest in other countries like Europe.

Europe, you know, some years outperforms the S&P,

you just don't know when.

Far_Lifeguard_5027 ask,

Why bother with medium/small cap funds

when the large cap consistently over performs them both?

Not true, simply not true.

The Russell 2000 has companies that are growing

a little faster than the S&P.

So in the right conditions, like lower interest rates,

they tend to outperform.

There's no guarantee and you never know

when they're gonna outperform.

But they're the small companies that grow into big companies

and they grow faster.

This comes from Dukethumper, different.

What percentage of portfolio is worth holding in bonds

as a 22-year-old?

Great question.

When you're that young, you can take more risk.

The market provides better returns over time.

When you're starting out, you can be as little as 20%

to 30% in fixed income bonds, and 70% in stocks.

And then when you hit 50, you go 60 stocks

and 40 fixed income.

Then when you hit 60, you go 50/50.

That's kind of a general rule

and you're sort of de-risking yourself

as you get a little older,

'cause you've built up a licensed little nest egg.

Generally, the market gives you 8 to 10% every year.

Sunvmikey asks, What sectors or stocks do you think

will boom in the next few years?

Nobody knows.

You know, seven stocks have been the majority

of the S&P returns for the last three years.

That's a very concentrated amount,

and there's no guarantee they remain

at the lead of the pack.

That's why you want diversification.

You don't want those stocks to become more than 5% each

of your portfolio.

Something to think about.

Here's Mary_Bit8237 asks,

How do you guys know when to sell?

You never know when to sell.

but a great rule is to make sure you stay diversified.

So if let's say you own a stock,

it becomes more than 5% of your portfolio,

that's too much in the world of diversification.

So you sell it down to 5%.

I've been doing that with Tesla for almost 10 years.

It's the discipline of diversification

that forces you to sell,

and no one ever goes bankrupt taking profits,

look at it that way.

Reddit user asks,

Which shark would you want to have a deal with?

For me, it's Kevin, because I think he cares most

about success of people he invests in.

Yeah, you know, even as Mr. Wonderful,

I have to agree with you.

I love that Kevin guy.

I mean, you know, he cares, that's what matters.

It's really about betting on the jockey

that's riding a good horse.

That's what I want.

I want entrepreneurs who can pivot.

And by the way, almost 90% of my returns have come

from women entrepreneurs.

They get stuff done.

You want something done, give it to a busy mother,

that's what works.

But I agree with you, Mr. Wonderful agrees,

Kevin's the dude.

Well, that's it, those are all the questions for today,

and I really hope you learned something.

Fantastic being with you.

And by the way, I'm impressed with these questions.

I'm glad you're thinking out there,

and the key to success, keep watching Shark Tank.

Mr. Wonderful says, keep watching it, or you're dead to me.

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