Check Out James Altucher

by James Hendrickson on May 27, 2020 · 0 comments

As part of our mission to bring you the best of personal finance, this article is about James Altucher.  Altucher is an American money manager, podcaster, author and entrepreneur.  He founded or cofounded a number of companies and has written 20 books and countless articles in publications like The Wall Street Journal.

I’m giving Altucher a guru rating of: A -.

This grade is based on his highly interesting biography and innovative ideas.

1. Interesting Biography.

Altucher has made and lost more money than most investors.  He went to Cornell and during his early career founded a company, Reset Inc, doing web design for major clients during the tech boom in the 2000s.  He sold the company he founded for $15 Million. But due to poor decision making he lost the money in a series of bad investments.  These early setbacks haven’t held him back.  In 2006, Altucher founded the social network, StockPickr, and sold that company for $10 million in 2007.  Altucher was an investor in Buddy Media, which sold to Salesforce.com for $745 Million in 2012.  Since then, he’s been on the leading edge of cryptocurrency and media.

His LinkedIn profile is here if you want to check it out.

2. Intelligent, Insightful and Free Analysis.

Altucher is usually far more insightful than the unimaginative publications the finance media usually offers.  For example, on the recent Jeffrey Epstein scandal, he offered a coherent explanation of the known facts:

  • Epstein made his money by creating an environment where wealthy individuals could have sex with underage girls
  • The CIA helped Epstein in exchange for information
  • Epstein killed himself in prison after bribing a guard or guards(s)
  • There were many incentives for corrupt elites to use Epstein’s services

The full article here.

Altucher’s recommendations on diversification are far more substantive than most.   In a recent newsletter Altucher recommended that instead of asset class diversification, investors should focus on strategy diversification.

Altucher on Diversification

Diversification 1.0 was: “buy Exxon and Microsoft”. One is oil and the other is tech. Now, those two stocks are no longer diversified. Most large stocks tend to move up and down as a group.

Diversification 2.0 was: “buy bonds and stocks”. Now this is not as true. Bonds and stocks also tend to move as a group.

Diversification is to play multiple strategies that are independent of each other and independent of the economy.

An example diversified portfolio:

  • some private companies
  • some closed end funds (for the dividends) that focus on municipal bonds
  • microcaps that are independent of the economy and each other
  • real estate in foreign countries with great GDP growth where housing prices have not caught up
  • arbitrage situations (e.g. shorting Canada and buying the US if the US has gone down several days in a row and Canada has gone up several days in a row)
  • peer to peer lending
  • statistical arbitrage
  • put selling on value stocks
  • some growth investing (but keep investments small)
  • investing in a basket of stocks owned by other great investors
  • special situations.

Note that I did not put Apple or Google or any big stock on this list. The average investor has zero edge on those stocks. Always try to have an edge.

What is great about this is it expands the typical discussion of diversification to include things like arbitrage, and peer to peer lending.

Here is the actual newsletter.  It is well worth reading if you’re serious about investing.

Another reason why you should check out James Altucher is his books.  Altucher is an accomplished author.  He did an excellent sleeper piece on Warren’ Buffet’s investing style, called Trade Like Warren Buffett.  Altucher analyzed some hard to find Buffet letters from the 1950s and 1960s before Berkshire Hathaway fame.  The book reveals some interesting findings.  Essentially it shows that Buffet utilized trading strategies that departed significantly from a pure value investing approach.

Best of all, Altucher’s work is mostly free. Most of what he publishes is available on his website (here) or in his many online appearances.

3. Challenged Marital History and Controversial Life Advice

Not everything Altucher offers is helpful.  He has been twice divorced.  To his credit he does not offer martial advice, but one does wonder if interpersonal relationships aren’t a difficult point for him.  Altucher also famously stated to Business Insider that college was a waste of time and money (here).  It is true that college is expensive, but average lifetime earnings are significantly higher for college graduates than non-graduates.  At one point Altucher lived almost exclusively in AirBnBs. This lifestyle is becoming popular, but it is still somewhat odd.

So for me – the bottom line is he’s an insightful analyst and entrepreneur.  Check out James Altucher out if you get a chance.

For more great dinksfinance investing articles, read these:

Thirteen Reasons Why I Invest In Real Estate

The Pros And Cons Of Investing In Stocks

The Best Time To Buy And Sell Mutual Funds

Image Credit: Wikimedia Commons.

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