Mark Cuban shares what he'd buy during a stock market sell-off

Mark Cuban during 2016 Advertising Week New York on September 28, 2016 in New York City.
Slaven Vlasic | Getty Image

The U.S. stock market has been experiencing substantial volatility this week, but billionaire investor Mark Cuban isn't spooked. In fact, he's buying an index fund.

"I'm not really nervous, I think it was necessary," Cuban told Fox News' "Your World with Neil Cavuto" on Monday about the market's decline. While the Dow and S&P 500 both reached all-time highs in January, on Feb. 5 the Dow dropped 1,175.21 points.

"When you have a run-up like we've had since the election, markets don't go in a straight line forever, and so if something had to happen, it was just a question of what, when and how much," Cuban says.

Cuban took advantage of the lower levels to buy an index fund and he's considering buying more of two stocks that he already owns.

"I bought some ," Cuban says, referring to the S&P 500 index. "My two biggest holdings are Netflix and Amazon and they've obviously done really well, so if they fall anymore I'll probably buy some calls. I'm a long-term holder."

Cuban has previously told CNBC Make It he recommends investing in a low-fee S&P 500 fund, which is a way to invest in the largest companies in the U.S. stock market. It's the same advice legendary investor Warren Buffett often gives.

"Consistently buy an S&P 500 low-cost index fund," Buffett told CNBC's "On The Money." "I think it's the thing that makes the most sense practically all of the time."

As for Amazon and Netflix, Cuban told CNBC's Andrew Ross Sorkin at the The New York Times DealBook Conference in 2017 that he plans to continue holding both companies.

"Just because of their growth," Cuban explains. "I've had them for a long time. I don't switch things around. I don't move it around a lot." In 2014, Cuban told CNBC that his plan for Netflix was to "never sell it."

This buy and hold philosophy is also shared by Buffett, who puts it like this: "If you aren't willing to own a stock for 10 years, don't even think about owning it for 10 minutes."

If you're interested in investing, Cuban has another word of advice: Don't borrow money to do it.

"The key is, if you're an individual investor, don't be in a position where you are borrowing to buy. Be in a position where you have solid financial footing," he tells Fox. Borrowing to invest, a practice called "buying on the margin," can be a bad idea, according to Cuban.

But, "If you've got cash on the sidelines and you're a long term investor, then yeah it is okay," Cuban says. "It is really going to depend on your personal situation."

Cuban says it is also critical to know what you are buying: "If you're going to go into the market, do your homework, understand what you're getting into and understand all the risks."

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