Another Real Modern Day Nicolas Darvas Millionaire

How did author and investor Chris Camillo turn $20,000 into $2 million in only three years during a bear market?

It was not luck or accident as he has been studying the stock market and investing in the stocks that make money for many years. Chris has had a fascination with investing since he was a child and after twenty years of learning what worked and what did not, he became a millionaire doing what works in investing.

The author warns investors to avoid mutual funds for their long term investment accounts due to their high fees and lack of performance.The majority of them do not even beat their  benchmark indexes. What a horrible deal to pay 2% in fees and then under perform an index fund or ETF. I agree with him and think it’s in your best interest to  stick with stock index funds or ETFs in your main investment retirement accounts.

Mutual funds are a pretty lousy deal for the average investor most of the time, they lose 20% of your money in a bear market year, but still take their 2% management fee or even worse…more. You take all the risk if the market goes down and they get paid regardless of your returns. I would advise adding a trend following method to get better returns than mutual funds, but that is another book altogether.

The author made millions investing in stocks using what he considered “information arbitrage”. The wealthy white collar upper class predominantly male money managers on Wall Street miss the beginnings of crazes like Crox shoes, they know nothing about the latest hot kids television show, and your teenagers may let you be the first one to know about the hottest new teen store, electronic device, or video game. These early ideas many times lead to huge earnings for the stocks of the companies that create them. These are the great investments the author recommends after due diligence.

They work because you are clued on the possibility of a company having better than expected earnings before the majority of investors and money managers know about it and jump on board the stock causing the price to rise on increased earnings.

While these insights are really not new (I have heard the same suggestions from books I have read by Peter Lynch and Jim Cramer) what is different is that the author kept swinging for the fences until he hit the consecutive home runs that made him a millionaire. This is the missing ingredient that causes many failures – lack of perseverance. After learning a great method from a rich investor we have to have enough faith in the method to use it until we win and win big.

What enabled Chris Camillo to accomplish this feat in such a short period of time was a concentrated investment strategy like the Nicolas Darvas system. He held concentrated positions of 25% or 50% of his entire portfolio in any one stock he truly believed in after due diligence. This is not diversification. It is putting your eggs in one basket and watching the basket very closely (As Warren Buffett has advised). Even that level of risk and concentration was not enough as he would hold his positions with one strike in-the- money stock call options that were 6 to 9 months until expiration for supercharged returns of sometimes 500% or more.

He was able to acquire his original stake of trading capital through basic frugality which he advises cash strapped investors to also do. The only purpose of this saved money being to go for it with big returns on concentrated leveraged bets on stocks of companies that had been researched. The author says he is only able to find and research one or two big plays a year, they are profitable but not common. To research he uses phone calls to stores, visits to malls, investor message boards, his friends on social networking sites, and a keen look out through his “investors glasses” for break out hot trends that others may be missing.

Chris Camillo also worked in consumer research so I have no doubt that taught him a thing or two about trends.

I really love these kinds of stories from real traders who have won big in the markets. His book just shows for a fact with a lot of study and dedication along with years of hard work and determination, (and I am guessing many failures) it is possible to become a stock picking millionaire with the right amount of courage.

Investing really is that simple and yet also that hard at the same time. You must have the guts to lose if you want to win. You have to do the work to find the picks. You have to learn how to let your winners run as far as they will. You must put in the hours of work and persevere if you want to win big.

This book shows you how one guy really did it, he won his own lottery. I only wished he would have told the story of his detailed trades instead of the principles of how he did it.I think that would have been amazingly educational step by step. I would have loved to read a Nicolas Darvas style book about his personal trading journey step by step.

But regardless, I highly recommend you listen to this self-made millionaire to find your trading edge needed to persevere in trading stocks.

Here is his book:

Laughing at Wall Street: How I Beat the Pros at Investing (by Reading Tabloids, Shopping at the Mall, and Connecting on Facebook) and How You Can, Too