Mark Cuban: Most Angel, Crowd Fund Tech Investors Are Underwater

Mark Cuban
(Image: biography.com)

Mark Cuban posted today in his blogmaverick.com site about the storm clouds gathering around technology investing. If you were to ask the woman or man on the street, most would say tech investments are where the money is made. Alas, the faith in tech, both for its financial potential and its "inevitable" progress, often eludes calm, thoughtful analysis. In his post, Cuban noted there are approximately a quarter-million "angel" investors involved with tech firms. Some of them are mom-and-pop investors whose common denominator is a desire to get rich quick. Cuban foresees the opposite result: plenty of losers wondering how they were so gullible to tech's siren song. When the rush to the tech exits hits, the lack of liquidity in small-time tech investing opportunities will crush both small-time players and a number of private equity firms.

Cuban's broadside is a strong hint that the "hot" tech market is either at or just past its peak. It is unlikely that the drumbeaters with motivation to sell to suckers would raise an alarm. Cynical institutions will take the money and shrug, as the world witnessed during the first tech bubble.

The sudden decline of tech and other popular stocks, along with smart money's sayonara from that market, could potentially signal the start of a bleak psychological cycle for the country. The withdrawals from the heroin known as "get rich quick" are certain to be painful. The impact of a stock market "shock" on the upcoming presidential elections would be significant. This scenario, in which a cocktail of resentment and despair would shape political campaigns, is traditionally one where candidates tapping into discontent become the voters' darlings. Does that sound like a formula for a Clinton victory?