Blog : Investor Face Off: Bono vs. Rapper 50 Cent
by Peter Leeds on April 29th, 2015
Bono versus "50 Cent" - who is the better investor? Well, technically I should say, "who is worse?" They both did very poorly, but with completely different investment strategies, and polar-opposite tactics.
Rapper 50 Cent potentially ran a pump and dump scam, which saw his 4 million Twitter followers drive prices of a tiny, obscure penny stock (HNHI) up nearly 300%. Direct quotes Tweeted from 50's account said things like,
"If you get in, technically I work for you."
"They are no joke. Get in now."
The problem was that 30,000 shares of the penny stock, H&H Imports (HNHI), were owned by the rap artist, and he failed to disclose that fact. Never trust any tips or "advice" that doesn't do these 4 things..
The other problem was that this money-bleeding penny stock was selling slippers with nightlights, and caffeine food additives. Certainly not ground-breaking products a penny stock can hang it's business plan on. Their sales were aimed at infomercials.
It is difficult enough trying to help people avoid these types of awful penny stock investments, while sending them to high-quality companies (which just so happen to be trading for pennies). The fact that a well-known celebrity jumps into the penny stock promotion game just makes matters worse!
Some Potential Errors (among many):
- failure to disclose ownership during public comments (S.E.C. violation)
- weak business model in underlying penny stock company
- H&H's financial position was a train wreck
Bono, on the other hand, wasn't all bad. His company, Elevation Partners, made some good stock market moves from time to time. However, they also made some serious gaffs, such as their investments in Forbes, Move.com, and Palm, leading 24/7 Wall Street to call Bono "the worst investor in America."
Some Potential Errors (among many):
- Very poor timing (For example, Forbes when the world was abandoning print for online, Move.com when the world was abandoning online for established, etc...)
- Position sizing (Too much money invested in each gamble)
- Failure to follow the number 1 rule in investing well
We've all made plenty of good moves in the stock market, and probably made just as many poor choices. The difference between Bono and 50 Cent comes down to intention and effectiveness.
50 Cent's intentions could be debated, but one thing is for sure - he was talking up a dog of a penny stock. Just because the penny stock's shares are inexpensive, and the company's idea is so-so, doesn't men it's a good investment. This is especially true in penny stocks when their financials and operational results are complete garbage.
Intention: 2/10
Effectiveness: 0/10
Bono has a good heart, and his ambitions are pointed in the right direction. But, hubris and ego may have taught the singer a strong lesson. I don't try to sing - Bono needs to leave investing to the investors. Being good at one thing doesn't mean you will be good at everything - take Michael Jordan when he tried out for professional baseball.
Intention: 9/10
Effectiveness: 4/10
The verdict?
Overall, Bono is the better investor by a score of 13 to 2, but they both aren't any good at it. They should stick to their own specialties - because at what they do, they are the best.
As of January 2017 we no longer publish the blog and it has been removed from the webiste menu.
You are reading this old blog entry because we still like to reference it. :-)
You are reading this old blog entry because we still like to reference it. :-)
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