James Altucher has built a large following with his bestselling books, popular podcast “The James Altucher Show”, and the financial newsletter “The Altucher Report.” But one of his most intriguing offerings for investors is access to his personal stock picks and investment strategies through the Altucher Investment Network. He isn’t shy about touting triple-digit returns on his home run stock picks. But such huge gains are not typical, so dive into his overall track record realistically. Verifiable superstars he previously recommended demonstrate his ability to identify groundbreaking businesses years before the crowd catches on.
On the other hand, losses are inevitable with his high-risk approach focused on unproven but disruptive companies. For example, some past Altucher picks failed to maintain early momentum. So, while reviewing his track record, consider both the meteoric highs and inevitable lows.
Understand his investment criteria
To benefit from picks, it’s essential to understand what criteria he looks for in potential stocks. Some key factors include:
- Seeking companies at a positive inflection point – Medium review on Altuchers Investment Network tries to identify stocks ready to accelerate growth right as they transition from the early start-up phase to the rapid expansion phase.
- Disruptive technology or business model – He favors companies utilizing breakthrough tech or an innovative business model to disrupt existing industries.
- Focus on future potential over current valuation – Traditional value investors may ignore his picks as “too expensive.” But Altucher emphasizes future growth trajectory over the most commonly used valuation metrics.
- Founder-led companies – Altucher prefers stocks where the founder is still leading the company towards their long-term vision.
Once you understand these core criteria, you better evaluate which stocks in your portfolio may fit the mold of promising picks per Altucher’s playbook.
Pay close attention to his reasoning
Altucher always provides an in-depth rationale for why he believes a stock could have explosive upside. It’s critical to carefully follow his logic rather than blindly trust his pick. Evaluate whether you agree with the underlying investment thesis and key assumptions. For example, when he recommended it, Altucher argued that its tools empowering small businesses would disrupt traditional e-commerce giants. Examining his reasoning helps you exercise your judgment on the stock’s prospects.
Diversify and size positions wisely
While Altucher will point to examples to highlight the enormous returns possible on a single stock, make sure to diversify rather than overexpose yourself to a few picks. And size your positions according to your personal risk tolerance and investment time horizon. Altucher himself aims for home runs by taking large concentrated positions in high-conviction picks. However, more conservative investors may prefer to allocate their picks as 2-5% portfolio positions rather than 10%+ positions.
While this provides valuable access to Altucher’s direct recommendations, ultimately you need to use discretion based on your analysis of each pick rather than blindly follow. And incorporate picks as just part of a balanced portfolio rather than overemphasizing Altucher’s basket. His brash style is not for everyone. But by selectively incorporating some elements of his unorthodox process into your research toolkit, you may identify some rising stars earlier than the market.