Feb 3, 2012
An exclusive interview with author and successful “amateur” investor, Chris Camillo by Daniel R. Murphy-
Murphy: Chris, thank you so much for agreeing to do this interview. Before we get to the book though you have really accomplished something rather specular, from April 2007 to April 2010 you managed your own investment portfolio and grew it from $83,752 to $2,388,311! Is it true you did this without any traditional investment techniques only using the method you describe in your book?
Camillo: Yes. I will only initiate an investment in a company when I think I know something about that company that is not yet widely known by Wall Street and the investing public at large. This methodology, which I refer to as information arbitrage, exclusively drives each and every one of my investment decisions.
Murphy: In your book, Laughing at Wall Street, you describe the two most common investment methods: technical trading and fundamental training. You then point out the inherent limitations in these methods and why you abandoned them. Would you say that your method is easier for the novice investor than traditional methods, more effective, or both? And why?
Camillo: I’d say that information arbitrage is certainly more effective than both fundamental and technical analysis, and for most non-financial professionals it is also likely to be easier. Historically, neither fundamental nor technical analysis has proven via empirical data to be able to outperform a randomly assembled portfolio of stocks. Statistically, those models don’t work – and that’s all that really matters.
In contrast, my approach to investing has proven, as evidenced though published and audited reports of my personal investing returns over multiple years (see www.laughingatwallstreet.com), to consistently outperform both market indexes and professionally managed funds.
Murphy: Your method uses information that almost anyone has access to and as I mentioned in my review of your book even a high school student could do it. Is that an exaggeration? Can just about anyone do this?
Camillo: Anyone, regardless of their age, profession, or educational background can replicate my investing approach and success in the stock market. Your success hinges entirely on your ability to become a critical observer – to retrain your mind to find the investment opportunities hidden within your everyday life – and the everyday life of those around you. If you regularly read magazines, watch TV, eat out at restaurants, visit the mall, or even connect with friends on Facebook – then you meet the prerequisites to become as successful information arbitrage investor.
Murphy: You started out with over $83,000 and for many people starting out these days that is a lot of money. Can you do this starting with a lot less? Could you really do it starting with $100?
Camillo: Absolutely. $83,000 marks the starting point of the audited returns referenced in my book but in actually I started out with a lot less – just a few hundred dollars as an investing curious teenager. Your question calls attention to what I believe to be one of the biggest obstacles for any newbie investor – in that most ordinary people don’t believe they can afford to take on financial risk. And that is unfortunate, because the sole path to successful investing, regardless of one’s methods or beliefs, is to risk loss. This is where the ultra wealthy hold a unique advantage, as their worries associated with taking moderate financial risks are reduced. For that reason, the rich tend to get richer.
In my book I provide a solution for overcoming this physiological obstacle. It is something I call a Big Money account and I strongly believe that everyone, regardless of his or her financial well-being or stage of life should have one. The goal of a Big Money account is simple: turn every $1 into $100. Using simple tools of financial leverage this seemingly farfetched goal is surprisingly achievable with as little as one winning investment every one to two years.
But first, one needs to find the money to fund your Big Money account. Even when money is tight, it is possible. The trick to “finding” money in your budget is to evaluate cash not at its current worth, but at its potential worth if aggressively invested as part of a Big Money account. Before long, you will begin to see $1 not for its par $1 value but for its $100 maximum investment potential. In doing so, you will open up a whole new world of possibilities—one in which you will become inspired to uncover new, increasingly large sources of Big Money investing funds from every aspect of your life. You might find yourself foregoing use of a lawn service to mow your own lawn or taking an extra week between hair cuts – not to save $20 a month, but for the potential $2,000 a month that you might earn when those savings are aggressively invested as part of a risk-adverse Big Money account. It does not take long for hundreds of dollars to grow into thousands, and thousands to tens or hundreds of thousands – and so on.
Murphy: I think your point in the book is that this method, assuming one does the due diligence, is faster than traditional investing, but I think you also point out this is not a get-rich-quick scheme – it does take time, work and focus, right?
Camillo: It took me years not decades to turn tens of thousands into millions, surprisingly very little work, but a whole lot of focus. I initiate an investment in a company upon discovery of an information imbalance, (in other words) when I think I know something game changing about that company that others don’t – and exit that investment when that game changing information becomes widely accepted as fact by Wall Street. There is nothing particularly complex or difficult about what I do – and most of my investing discoveries occur not while slaving over the analysis of financial statements but while immersing myself in daily life. That said, it should be noted that what I do takes tremendous patience. I might make dozens if not hundreds of potential real world observations over the course of the year in hopes of identifying just one or two credible information arbitrage investment opportunities.
Murphy: How much time does it take? How many hours a day or a week do you spend on it and how much at minimum would you say a novice needs to spend to make this work?
Camillo: I spend at most an hour or so each week performing due diligence on my real world investment observations. The hard part is not the post observation due diligence but in learning to refocus your mind to identify the game-changing events, products and trends that are constantly taking place around you. This is not so much time consuming as it is challenging in that you must radically change he way you perceive and interact with the world around you. Connect and regularly engage with family, friends, colleagues, and children. Read weekly tabloids. Never miss an opportunity to watch a blockbuster movie. Keep up with the evolving landscape of products, media, entertainment, and culture as it intersects with you and those in your life. The trick is learning to do all those things while at the same time being alert for anything and everything in your daily interactions that could materially affect the sales of a publicly traded company.
Murphy: Part of your technique is to exploit budding trends that Wall Street is not yet aware of. Do you think that at least some analysts on Wall Street will be reading your book and devoting some energy to duplicating your method? Would that matter in terms of reader’s succeeding with this?
Camillo: I see few if any financial analysts devoting energy to duplicate my method as they are paid to decipher complex problems they as “financial professionals” are uniquely qualified to “solve.” Their firms make money from selling the professional financial services of crunching numbers and analyzing charts, regardless of whether those services make you money. In a financial industry that is richly rewarded for mediocrity, there is simply not enough financial incentive for them to leave their comfort zone. And that is great news for us Wall Street outsiders.
Murphy: OK, by profession you are a market research executive. That means it is your profession to analyze markets and trends, right? Does this give you a big advantage over people who have no training or experience in this area?
Camillo: If anything my background in market research has taught me to fully appreciate the value of real time information. As we all know Wall Street has a high concentration of city dwelling, middle-aged men who influence investment decisions – that creates opportunities to profit from information imbalances that are most pronounced with respect to female, youth or rural oriented products, companies, and trends – so that is where I focus my energy. So if you look at my big investment successes, many of them tend to focused on these areas where Wall Street is weakest. The geographic, demographic, and psychographic detachment that I hold from those that influence investment decisions on Wall Street is my real advantage.
Murphy: You demonstrated quite a gain over a short period smack in the middle of a growing recession – what is being called hard times. Many have lost a lot of money in the markets during that same period. Would you say this method is recession proof and why?
Camillo: It has been said that there is never a bad time to start a good business. I’ll take that thought a bit further by saying that there is never a bad time to initiate a good investment. For proof of that idea one just needs to look at the performance of Apple both as a company and investment through the most recent recession.
Murphy: Now, if our readers buy your book, read it carefully and then start using your method, what would be the two or three more important things you would recommend that they do for success with this?
Camillo: My investing strategy is based upon two rules:
1) I initiate an investment upon discovery of game-changing information not yet known by Wall Street and the investing public at large.
2) I exit that investment when the game-changing information becomes widely accepted as fact on Wall Street and the investing public at large.
There are many supporting things to keep in mind of course, but if you lose focus on the importance of these two rules, you will have a hard time finding success as an information arbitrage investor.
Murphy: What would be the one or two things people should really avoid doing to succeed with this?
- Believe what you see, not what financial pundits and those on Wall Street tell you to believe.
- Do not limit yourself to “Investing in what YOU know”. Exponentially increase your observational and due diligence resources by leveraging each and every person in your daily life, and those you are able to connect with through social media, business networking, and online investment communities. Connect and regularly engage with family, friends, colleagues, and children.
Murphy: You could have just quietly kept making significant investment gains and not said a word about this to the general public. Why did you decide to write the book and give the secret away for a few dollars?
Camillo: The key to prospering as an information arbitrage investor lies in one’s ability to quickly uncover and process game-changing information. The larger my observational network, the more likely I am to discover and vet the next game changing trend before Wall Street. Goldman Sachs and Morgan Stanley have their research departments, but we self-directed investors have one another, and together we outnumber and out-diversify all the world’s investment “experts” and “professionals” combined. Before writing Laughing at Wall Street, I had maybe a dozen people who had taken the time to learn my investing methodology and who were regularly sharing their daily observations with me – for our mutual benefit. Now I have hundreds, soon to be thousands. To the prospective readers my book I don’t want your money (my publisher and the book stores take the bulk of that). What I do want is for you to share what you are seeing with me. I want you to help me find identify my (or should I say our) next big investment.
Murphy: Can we expect another book from you soon? If so what will that one focus on?
Camillo: No. I don’t consider myself an author by trade and don’t think I would put myself through the pain staking process of writing another book. I had a story to tell in Laughing at Wall Street and now that I have shared that story I plan to spend the foreseeable future cultivating relationships with those who are willing to barter their investing observations with me.
Murphy: Chris, I want to again thank you very much for doing this interview and let’s end with any comments you would like to make – any final thoughts for your readers out there?
Camillo: As an ordinary person with your feet deeply set in the real world you have a distinct advantage over the professionals working on Wall Street when it comes to picking winning investments. I am planning to soon launch a program to incentivize Laughing at Wall Street readers to share their game-changing investing observations with me. If one of those observations leads to my initiating a winning investment I will in turn share a portion of my investment profit with the contributing reader, allowing my readers to earn up to $100,000 per observational contribution. Wall Street professionals charge you fees for their advice – I’ll pay you to simply share with me what you see over the course of your every day life. Stayed tuned to Laughingatwallstreet.com, www.facebook.com/laughingatWallStreet, and my twitter @chriscamillo for details.
This interview is copyright protected by Daniel R. Murphy 2012. Permission is granted to reproduce this article in its entirety if proper credit is given. Attribution should be as follows: “Books2Wealth Interview, © 2012 Daniel R. Murphy, used by permission, www.books2wealth.com. “