The Kirk Report has an enjoyable interview with James Altucher, managing director of Formula Capital, an asset management firm and fund of hedge funds, and author of four books on investing: Trade Like a Hedge Fund, Trade Like Warren Buffett, SuperCash, and The Forever Portfolio. I’ve extracted below several of my favorite parts:
Kirk: … When and how did your interest in the market begin?
James Altucher: From 1995 – 2000 I was building websites for entertainment companies. I built websites for HBO, Miramax, New Line Cinema, Loud Records, Bad Boy Records, Interscope, etc. It was the best time of my life. For HBO, for instance, I did a website called “3am” where I spent all my time interviewing drug dealers, prostitutes, homeless, whoever I could find at 3 in the morning in NYC. Other entertainment companies wanted that kind of flavor and suddenly I was doing websites for almost every media company in the city. The company I started, Reset, built up to about 50 employees and then we sold it. So I had some money which I promptly invested in Internet companies. All in the bust. So I decided I needed to learn more about the stock market.
Kirk: What would you say is one of the most important lessons you learned early on?
James Altucher: The only three things that are important are discipline, persistence, and psychology. Without those three things there isn’t a strategy in the world that will work for you. With those three things, just about any strategy will work.
Kirk: …So, how has your approach toward the markets changed and improved over the years?
James Altucher: No human or strategy can consistently beat the market. The best traders I know are some of the most humble guys out there and have no arrogance on their market opinions at all. They are able to switch opinions and strategies very quickly. I would say that over the years any arrogance I had about any strategy has probably disappeared and now I’m appreciative of just about any strategy out there as long as it comes with persistence, discipline, and positive psychology.
And, purely because it made me laugh out loud in the traditional, offline sense, extracted below from Go Ahead, Hate Me. I’ll Still Help You Make Money (subscription required), which Altucher links to as “7 Reasons to Hate Me”:
Or when I went on CNBC once there was a Yahoo message board poster saying, “There was some homeless looking guy named James Altucher recommending stocks on CNBC today. Pretty cool of CNBC
P.S. I saw this Kudlow Report debate between Altucher and John Hussman of Hussman Funds in June and I’ve been trying to find an appropriate place to run it. Altucher believes the market is heading to 1,500 – watch Hussman’s face when he says “1,500″ – while Hussman argues that the economy is in some trouble according to the ECRI and other indicators. The two debate back and forth, unable to agree, until Kudlow says words to the effect, “Give us your strategy. What would you buy right here?” Altucher says, “Exxon (NYSE:XOM) at 4 times earnings, Microsoft (NASDAQ:MSFT) at 10 times next year’s earnings, IBM at 10 times next year’s earnings, Cliffs Natural Resources (NYSE:CLF), makes iron ore, at 4 times earnings. These companies are cheap.” Hussman says, “I don’t mind James’ picks. They sound like reasonably valued stocks relative to the rest of the market.” I find it interesting that they can diverge on the economy and the market, and still come close to agreeing on individual stocks. See the debate.