Chris Lowe (CL): Thanks for talking with us today, James. I’ve been reading your blog for almost a decade, so I’m quite familiar with your background, but would you mind explaining it a bit for our readers?

James Altucher (JA): I ran a hedge fund for several years. Many of my investors were, themselves, top hedge fund managers. I also am now in about 30 different angel investments. And in 2000, for better or worse, I ran a $125 million venture capital firm during the dot-com bust. So I’ve seen the top highs and the worst lows.

CL: Working for hedge funds, you must have been exposed to a lot of different investing strategies. Was there one that stood out as particularly effective?

JA: I realized one thing that is very important. If you’re the smartest person in the room, you’re standing in the wrong room.

I’ve had many successful investments and many unsuccessful ones. When I lay them all out and see what distinguishes the all-stars from the zeroes, I see one thing in common: Someone smarter than me had already invested in the successful investments, even at higher prices.

So I started to develop a strategy around that. I had banks that wanted to make ETFs out of it. Other funds wanted me to build a hedge fund around the idea. Another time, I even made a very popular website around the idea. It had over a million visitors a month.

More recently, I haven’t been as involved in financial media, so I’ve just traded the strategy for myself in my private and public investments. And it’s worked very well.

Here’s a hypothetical example of how it works: Let’s say Warren Buffett buys IBM stock at $100. Then it goes to $80.

Sure! I will buy it there. It’s as if Warren Buffett was my unpaid intern, and I get a discount to what the best investor in the world is doing.

Since I know so many of the top hedge funds in the world from my own hedge fund days, finding out what they are investing in, plus seeing their top analysis, has been very helpful to me.

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