Final answer:
Mark Cuban likens non-dividend stocks to baseball cards, indicating that their value is set by what others are willing to pay. Non-dividend stocks lack dividends, with value only realized upon sale, akin to collectibles. Stock market investments have potential for a high rate of return but carry considerable risk and offer liquidity.
Step-by-step explanation:
Mark Cuban's statement comparing non-dividend stocks to baseball trading cards is centered on the concept that their value is dependent on what someone is willing to pay for them. This reflects a fundamental point regarding non-dividend stocks: They do not offer a return through periodic payments like dividends. Instead, their value is derived from capital gains, which is the profit made from selling the stock at a higher price than it was purchased. This gain can only be realized when another party is willing to buy the shares at the inflated price. Therefore, like collectibles, which may have no intrinsic value other than what a collector will pay, non-dividend stocks do not yield returns until sold.
Furthermore, investing in the stock market comes with its own set of risks and rewards. Over a long period, stocks have demonstrated a potential for high rate of return, but they also carry high risk due to their volatility in the short run. The liquidity of stocks is an advantage, as they can generally be sold quickly in public markets, turning investments into spendable money with relative ease compared to tangible assets like real estate or collectibles.