Kevin O'Leary Reveals His Next Big Bet

They cannot be leaders in that. Name one that you got slaughtered on 20 years ago, and name one that maybe you got slaughtered on recently. That's a good question.

Everybody in my office said, what the f*** are you doing? I'm getting emotional about remembering this thing.

He said, Kevin, we've been worried about this trade for two years. I'm in a three and a half, because you don't get Mr.

Wonderful for free. That whole sector is going to get crushed, including Bitcoin.

So now we have over $200 million worth of cards.

Kevin, thanks for being here. Great to be here. Really appreciate it. I kind of want to get into it. I know you invest in a lot of private companies.

I want to talk about your public companies and the type of different industries you look for in that world. Yeah.

So I start with a basic investment premise on the public side.

We have a lot of positions, but there's a discipline I learned a long time ago the hard way, and it's the discipline of diversification.

When you're an investor in stocks, you get emotionally involved. There's no way to stop it. You start to do your research.

You fall in love with a company. Maybe you like the CEO. Maybe you like the story. Maybe you like the sector, and you go nuts.

You keep buying the dips. You keep going, going, going. The

problem with this is if you look historically at what happens, even to the greatest names, there are massive corrections on sectoral transitions.

And you don't know where in the time cycle you're involved. So here's the rule.

No more than 5% in anyone's stock, no more than 20% in anyone's sector. So you have sectoral discipline.

So right now people are loving the MAG-7 or they're not loving the MAG-7, whatever it is.

But in this rule, NVIDIA is never more than 5% of your portfolio.

And all of tech, all of it is no more than 20%. And it forces you to basically go out there and find other sectors that may be out of favor.

However, they come rolling back in and you can never time when that happens.

And so my returns are based on this concept of diversification.

Although if you looked at what I was doing 20 years ago, I wasn't applying those rules. and I got slaughtered.

Name a stock that you got slaughtered on 20 years ago, and name one that maybe you got slaughtered on recently.

That's a good question. I have to go back 20 years. I'll tell you what it was.

I shorted Yahoo. I got slaughtered.

It got added to the S&P 500, and I let the position,

the amazing thing about that position, I'll never forget it, it was with Bear Stearns. Remember Bear Stearns?

They kept calling me on margin calls and every four hours because I was losing three, four million an hour.

If you remember that stock, it went from like eight bucks to $280. It was crazy.

And I kept piling in assets to protect the margin call. I didn't want to get called out.

But it basically took my net worth down almost by – I can't remember. It was a huge percentage, 40%, 50%.

Then one day I was golfing at a golf course called Braeburn outside of Boston.

I'm still a member there. And I

remember my broker who was at Bear Stearns at that time and was a good friend of mine called me and said, Kevin, I was on the eighth hole.

I'll never forget this. He said, Yahoo's collapsing right now. It's collapsing.

It's gapping down 20%. And I had been in this thing for years.

And he said, let me cover. I said, fuck it, Mike. We're going to hang in right to the end.

And that stock went all, excuse my language, but I'm getting emotional about remembering this thing.

He said, Kevin, please, the back office is begging me to clear this trade. We've been worried about this trade for two years.

I said, Mike, now's not the time. If it's gapping down, we've got to wait it out.

So it was both my worst call and my best call all at once, but I never, ever, ever shorted a stock again.

It's funny. I've never shorted a stock, scared of it. Because it's an unlimited downside.

But I'll never forget the emotion I had, the gut-wrenching watching my net worth getting slaughtered, and then it came all back years later.

The point is you don't have to do that to yourself. You don't have to do that to yourself.

With the diversification strategy I'm using now, that never happens.

Okay, so we watch you on your show and we see you investing in CEOs and the companies and the products.