MADELEINE BRAND, host:
This is Day to Day. I'm Madeleine Brand. Next time you get your hands on a newspaper, flip to the business section. Don't read it, though. Just look at the pictures, and look at all those graphs. They are probably all sloping one way - down, down, down.
Well, with stocks turning sour, what new investor would not be scared to take a chance on the markets? James Altucher sees the light. He has a new book out called "The Forever Portfolio." And it's a manual for people patient enough to get into the markets, sit tight, and watch their money grow and grow and grow. Welcome to the program.
Mr. JAMES ALTUCHER (Managing Director, Formula Capital): Thanks, Madeleine.
BRAND: OK, it's called "The Forever Portfolio." What does that mean?
Mr. ALTUCHER: Well, basically, I get really stressed out when I open that newspaper and see, you know, the Dow down 600 points, the Dow down 500 points every single day. Particularly in this past month, it's been brutal for investors.
But meanwhile, what we have going for us is, there are these enormous demographic changes that are occurring around the world right now that are almost like tidal waves behind certain companies. Investing in those companies now, they will ride those tidal waves, and you don't have to worry. You can hold them forever. That's the point.
BRAND: OK, what are some of those demographic changes?
Mr. ALTUCHER: Well, for instance, the fact that every year, Americans and people worldwide are more overweight one year than the year before. This has enormous...
BRAND: So wait, you're saying to invest in fat?
Mr. ALTUCHER: Well, exactly. Or to invest in companies that prevent that fat. So that's one potential demographic change. The amount of chocolate consumed worldwide is greater every year, particularly, you know, as you have a lower class in China that's moving towards the middle class.
The problems with clean water in these urban areas is getting larger and larger every year. For instance, right now, just about 50 percent of all hospital beds worldwide are filled with people suffering from clean-water-related diseases or unclean-water-related diseases. So making investments based on these trends and the others I discuss in the book could be enormously profitable in the long run.
BRAND: Does the fact that this economy, which seems to just take hit after hit after hit, and it seems to be heading straight into a recession if not worst, does that at all change the advice that you give? And presumably, you wrote this book before all the really bad news hit.
Mr. ALTUCHER: Not really because this recession, mini-depression, whatever you want to call it, this too shall pass. And in particular, the companies that I focus on in this book are the ones that are not so economically-dependent. People as they age will need healthcare. They'll need Johnson and Johnson. The need for those services is not going away. It's only going to increase because of the demographics.
I'll give you another simple example. 45 million Americans have tattoos, and that number gets bigger every year. Well, as these people get older, the people who have tattoos, more and more of them want to get rid of those tattoos. So, if you got a tattoo when you were 17, and now, you're 60, well, you might not want that, you know, image of Satan all across your arm.
(Soundbite of laughter)
Mr. ALTUCHER: You know, you might want to, you know, it's a flabby Satan now. So basically, who do you go to? You go to a company like Cynosure, CYNO is the ticker symbol. They have all these lasers for, you know, eliminating tattoos in as pain-free a way as possible. And this company's services are going to be needed regardless of the economy.
BRAND: You're saying that this company is a better bet that GM?
Mr. ALTUCHER: Oh, well, of course. Just as a quick aside, Cynosure, the whole company is worth $103 million. They have $98 million in cash and zero debt. So you can buy almost the entire company for free, and they have great growing revenues and a great space. They do, you know, aesthetic skin treatments to a demographic that's only getting larger.
BRAND: But I have to say, every time that I think, OK, now is the time I'm going to get in, this is a great buying opportunity, as everyone tells me, every time I look at the stock market, it's gone down again, and I think, phew, it's the end of the day. Thank goodness I didn't buy in today. But then the next day, it happens again.
Mr. ALTUCHER: Yeah, I know. It's depressing. Looking at this market, the market is a reflection of worldwide psychology. So clearly, people around the world are depressed right now, and they're not optimistic about the future, which is sad.
But in the long run, the things that will make the most money are not pieces of rock like gold or liquids like oil or cash, which is just pieces of paper, but real growing companies that are servicing strong demographic trends.
It's impossible to call a bottom. Yes, all these stocks that are cheap could get cheaper, but now is certainly one of the best times to buy stocks that we've seen in the past 70 years. I mean, it's incredible, which is why Warren Buffett is out there buying stocks right now.
BRAND: James Altucher is managing director of the money-management firm Formula Capital. His new book is called "The Forever Portfolio: How to Pick Stocks That You Can Hold for the Long Run." Thank you very much.
Mr. ALTUCHER: Thanks, Madeleine.
BRAND: And you can see a list of his top-10 forever investments and read an excerpt of the book at our website, npr.org.
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