Timothy Sykes turned $12,415 of his Bar Mitzvah money into $1.65 million. From 1999 to 2003 he attended Tulane University, invested in the stock market and made millions. Sykes says that his fellow students always knew something was up when he would buy everyone in the bar drinks. Just prior to graduating in 2003 he began a hedge fund, Cilantro Fund Management, LLC. In 2006 his hedge fund was Barclay's #1 ranked Short-Bias Fund for 2003-2006.
By the end of 2007, Sykes lost 35% of his hedge fund and moved on to create a publishing company, BullShip Press, to, according to his web site, "promote Freedom of Finance, the concept of a hedge fund manager's right to discuss their business freely without risk of penalty or censorship." The first and only book he published was "An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund."
Sykes, now 27 years old, wants his full $1.65 million back. He started "TIM" (Transparent Investment Management), with the goal of repeating his original feat of turning $12,415 into millions. But now he is bringing his fans along the way with a detailed step-by-step blog. On May 1 Sykes debuted his new site - www.timothysykes.com - which is much more than a blog. He has added everything from TIMtv and TIMradio to even a talking photo gallery! In his first interview since the launch of the site, I caught up with the awesome, young and energized investor...
Tim, let's start at the beginning. You write in your book "I have no extraordinary talents and yet I was a millionaire by the age of 22." What inspired you to start investing your Bar Mitzvah money?
I was an injured high school tennis player who had already gotten into college early, so I really had nothing else to do. The market was going crazy so I thought I'd give it a try--and everything since has been trial and error because there's no mainstream guide for responsible financial speculation; that is, until I got into the publishing business!
You say: "The digital world has created a new frontier where it's every man for himself - and there are few rules." How well do you fit into the hedge fund and investing business. What do your colleagues (whom I assume are much older than you) think of Tim Sykes?
I don't fit in, I'm not a value investor, I don't like trading any of the most popular plays--big technology stocks, currencies or commodities--nor have I ever gotten comfortable with leverage. I am a short selling penny stock trader, ironically a combination of the three most derided niches in all of finance (maybe that's why they work so well together, as in negative x negative = positive.)
My colleagues think I'm a self-promoting fraud, definitely due to my big mouth and all the press I've received, much of it inaccurate. That's why I'm so into blogging all the wonderful details of my strategy and answering all questions - because I have nothing whatsoever to hide. I'll never stop promoting because this is a great sport, which, thanks to all the snooty, narrow-minded and boring people in finance, isn't as popular or respected as it should be.
You are certainly not conventional. Heck, you brought models on CNBC. How do you come up with your ideas? What is your creative process?
I base everything I do on cutting through all the industry stereotypes and rules. Thanks to the success of the TV show "Wall Street Warriors" in which I was featured, tens of thousands of people have contacted me, mostly wanting to know more about stock trading and hedge funds. So, I basically just have to speak my mind, showing everyone how fun and understandable it all can be once you cut through all the B.S. associated with making money in the stock market. Ideas like this accomplishes all three goals and while it may offend some, I don't really care because I'm on a mission!
You trade, and have made a ton of money with "penny stocks." For those who don't know, what are penny stocks?
Penny stocks are stocks that trade under $10 per share, mostly developmental and speculative companies, many of which are total frauds. Wall Street cares little for this niche because of all the corruption, but I love it for that very reason--because hype, manipulation and suckers are easy enough to spot once you're cynical enough.
You seem to want to be "Jim Cramer2.0." What features is your new site going to have?
I think Jim has been great for the industry, but he just gives too many picks all the time--my entire philosophy is based on the thinking that there are only a few great opportunities at any one time, so you need to find something else to do when you're waiting for those to present themselves.
My new site will be unlike that of every other financial media outlet or blog, as it'll be geared towards making this stuff totally transparent and more importantly, fun! TIMtv and TIMradio will be online videos and podcasts - some serious, some not - but all will be incredibly educational, without boring people to death or using highly technical terms as is the industry habit. More importantly, TIMbucks will reward users for posting comments, sharing their thoughts, links, and asking questions. Basically, so unlike Cramer, this isn't a one-man show - I'm just the community director. I have little doubt that within a few years, my website will help produce another multi-millionaire who will have benefited from my experience, but will be able to take it to the next level, making me like Archie Manning watching my sons win the Super Bowl!
You want to get college students involved with, and passionate about, investing. How are you doing that and what has been the reaction?
Mainly, it's just showing them they can do this from their dorm rooms as you don't need a fancy office, connections or a lot of money--you just need a few thousand dollars, an internet connection and a willingness to learn. I'm trying to get people to understand trading is great not only because of its ability to create great wealth but also because it teaches great lessons. Surprisingly, the happiest I've been is when I'm in the midst of the trading process itself, not when I'm spending my winnings. This goes against superficial and inevitably harmful publications like Trader Monthly, that encourage readers to try to make the most money the quickest (so they can buy soulless products from their sponsors). I'm glad my message of education first is reaching these students before they get turned to the dark side.
You wrote: "If we win, we're richer, and if we lose, we're wiser." What was your biggest mistake and what did you learn from it?
So true. I personally lost over $300,000 when I got away from my core trading strategy and tried becoming one of the cool kids by investing for the long term. I learned to never trust any company or CEO, there's a lot more corruption than you ever imagined, and to stick to what works for you, whether or not it's the most popular route. This loss was incredibly painful--as it was my first and only major one--but it's made me an infinitely better teacher, wiser and more conservative.
You have certainly had your fair share of good and bad press. What is your favorite good clip and then what is your favorite bad clip? Please include links and why!?
My WallStrip interview is my all-time favorite, I got to tell my story, rip on the industry and showcase my talent for verbal diarrhea.
My worst has got to be Page Six because I caught the editor of Trader Monthly, Randall Lane, red handed for being his assumption-making cocky self (he drew conclusions based on circumstantial evidence, which could've been avoided if he'd read the copy of my book "An American Hedge Fund" I'd sent him), but because I was too naive at dealing with the press and him being somewhat powerful, they twisted the story around in his favor. Talk about your all-time backfires!
Your wardrobe is a robe. If we went to the money-man's closet, how many suits would we find!?
Yes, I prefer my robe, or just a t-shirt and boxers when it gets warm out, but I do have two fancy suits from my previous superficial life. Tell me this, what purpose does a tie serve? It's always bothered me--I see it as a time-wasting accessory, prison garb for corporate drones everywhere.
What was the last song you downloaded onto your iPod?
I've never had an iPod or mp3s--Eminem CDs used to pump me up, but I know exactly what I must do now so I don't need any more motivation; there's so much wrong with this industry--mostly due to absurd SEC regulations--I'm the only one who seems willing to risk reputation and income to cut through all the B.S. Call me crazy, but I think being brutally honest will actually make my reputation and income!