Saturday, September 27, 2008

Cuban on the Splurge

DALLAS - MAY 1:  Owner of the Dallas Mavericks...Image by Getty Images via DaylifeInteresting proposal from Mark Cuban on the Splurge. Why not let private investors contribute to a Private $700B fund, and then buy all the bad debt at a discounted price? This way, private citizens who want to take the risk, can do so, while taxpayers who think there are better things to do with their money (there are), don't have to get dragged into the mess. I like it a lot.

Cuban is touching on a broader trend in finance, and that is the growing ability to invest in just about anything. Barclays, among others has been a leader in the growing ETF (or Exchange Traded Funds) which essentially buy illiquid, tough to store, or immobile assets, and then sell little pieces of them in the form of shares of ownership. Just like when you own a share of Microsoft, you own one small piece, the same is true with a bar of gold stored in a bullion bank (GLD). This way, capital can flow to previously difficult to invest in areas and make a return. Also, the concept takes advantage of economies of scale in doing things like storing gold or silver (SLV). This is happening all over the world with large utility projects, bridges, etc and I really like the concept.
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