James "RevShark" DePorre is not your typical investor.
In fact, many of his investing theories make traditional financial advisers shudder. Forget "buy-and-hold" and poring over reams of financial data and management reports for a particular company, he reasons.
DePorre wants to know what the stock's price is doing at this very moment.
He practices "shark investing," which consists of swooping in quickly on a fast-moving stock, taking a quick bite and ride on the profit momentum, then swimming off when the price surge has ended.
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DePorre has detailed his investing principles in a new book "Invest Like a Shark: How a Deaf Guy with No Capital Made a Fortune in the Stock Market" (Financial Times Press, 208 pages, $25.99).
The book's forward is written by none other than CNBC "Mad Money" host Jim Cramer.
Encamped Tuesday in the first floor den of his posh, three-story waterfront home on Anna Maria Island, DePorre gazed at an encircling bank of computer monitors displaying stock charts, investor blogs and market news.
In addition to running a hedge fund, DePorre also invests a substantial part of his own money in the market. On Tuesday, DePorre said he had just turned a $40,000 profit on the $2 million he had in the market.
DePorre took a few moments out to talk about his book, his shark investing philosophy and other theories on the market.
Q:As you state in your book, your investment approach flies in the face of what most traditional financial advisers tell their clients to do — buy good companies and hold them. Do you ever get hate mail from those traditional advisers blaming you for leading investors astray?
A:"Most advisers appreciate the fact that they’re kind of stuck with a particular style. They don’t really have a choice. I think a lot of money managers are unhappy with the lack of flexibility they have. I do get individual investors who don’t like to think they’ve wasted all their time sitting on a stock passively for so long. It kind of bugs them. I’m not saying all buy-and-hold investors are going to do poorly. Some of them are going to do very well if they pick the right stock. But I think that’s more a function of luck."
Q:You mention in your book that at times you invest in companies that you really don’t know all that much about but that have shown desirable trends on charts or have a lot of buzz about them at the moment. Isn’t this gambling in a sense?
A:"Is that gambling? Well, you know there’s the whole question about investing overall. Where do you cross the line between what’s called speculation and gambling? All investing is gambling to some degree. But there’s a big difference being the guy who just puts a coin in a slot machine and the blackjack player who counts cards and gives himself an edge. You can create better odds for yourself by being systematic."
Q:We currently have Google trading above $700 a share. Apple is up over $180. Baidu.com, the Chinese version of Google, has been up in the $400 range. Whatever happened to the stock split and are these prices shutting out a lot of common-man type investors?
A:"I think momentum investors, who really drive a stock, they don’t like splits because they would prefer that the number of shares outstanding be smaller because it makes the stock move bigger, and they like the volatility. When you split a stock, it decreases the volatility. Splits help if you want to try to increase your shareholder base and allow the smaller guy (in). But they (corporations) don’t care about that. I think this trend (of no splits) will continue."
Q:There has’s been a lot of mayhem in the market lately, with soaring oil prices and housing and mortgage data continuing to pressure stocks. Although you state in your book that those who try to reason with and explain occurrences in the stock market will be sorely disappointed, how does this current market score on a scale of 1 to 10 in terms of volatility and unpleasant surprises?
A:"I tell you, it really is a classic example right now of why you should not try to argue with the market. The real estate market’s falling apart, we’ve got these credit and debt issues, and mortgage markets are drying up. Oil’s hitting record highs, retail’s slowing, the economy’s starting to slow. And the stock market is near highs. It seems totally illogical. But I think you can’t try to figure that out. You’ve got to respect what you believe and go with it as long as it lasts."
Q:What types of strategies and approaches can individual investors put to work for them going forward?
A:"For the first time in many, many years, the smaller stocks are really doing poorly compared to these big multinationals. I have always had a bias against buying stuff like Microsoft or Intel or Hewlett-Packard, or Cisco. But those are the stocks that are being seen as safe havens. Money's flowing into them and probably will be for some time. I think investors are going to have to go into these bigger multinationals. Because the U.S. economy is kind of soft, you've got to look for companies that have exposure to overseas economies. And those are going to be the big boys."
For more information about DePorre and his new book, visit www.sharkinvesting.com.