And yet the blunt-talking, Wall Street-savvy Rudd, 64, has millions of readers across the country, based on the number of hits on his Web site and the publication of his weekly Streetwise column in newspapers such as the Sarasota Herald-Tribune, the Pittsburgh Post-Gazette and other smaller papers across the country.
“Lauren is an excellent writer,” says Herald-Tribune business editor Matt Sauer. “He distills complex ideas down into simple-to-understand prose.”
Rudd describes his column as a “bare-fisted, no-holds-barred and no-mercy-shown look at Wall Street, while at the same time often providing you with the merits of investing in a particular company.” In addition to the weekly column, he writes a daily MarketView for his Web site (ruddreport.com).
Offering both columns for free could be seen as a smart way to market his brand, but Rudd says it’s more a gesture of gratitude with a bit of ego thrown in. “This is payback for the success I have had in my life, to be very blunt,” he says. “I also enjoy writing, and there is some egotistical satisfaction when you open the paper and there is your column.”
Rudd’s interest in investing goes back two generations to his grandfather, whose investments kept his family afloat after they had to flee from
Rudd received degrees in economics and computer science and did two years of graduate work in economics at the
In 1985, he launched Rudd Capital Management and The Rudd Report, a newsletter that offered investment analysis and advice. When the stock market crashed in 1987, “people began asking me for advice,” Rudd says. In what he describes as an effort to help the average investor, Rudd proposed writing a weekly investment column for the Trenton Times. “They weren’t interested at first, but I kept harping at them, and finally in July 1988 they said I could have a column on a trial basis,” he says.
In 1995, he renamed his company Savannah Capital Management (he had moved to
After 13 years of flying solo, Rudd recently joined
But his thinking began to change after he met Art Day and Don Hagan and learned more about the model they use for investing. According to Rudd, the Day Hagan model interprets changing market conditions and adjusts an individual’s portfolio by “overweighting areas with the greatest probability of success and underweighting areas of weakness.”
He says the traditional strategy of buying the stock of quality companies and holding that stock indefinitely no longer works “because technology, combined with greed and a plethora of exotic financial instruments, has changed the entire character of Wall Street.” Investors now need to follow the economy and rebalance their portfolios at least quarterly, and the Day Hagan model helps investors do just that, he says.
“I don’t want to quote a specific number, but I have brought many clients, representing multimillions of dollars in investments to Day Hagan, and the clients are exceedingly happy,” he says.
Rudd maintains two offices now, one at Day Hagan and one in the comfortable Siesta Key home he shares with Diane Rubin, a woman he met through Match.com in November 2006. Also sharing the house are his two Italian greyhounds and her Chinese crested powderpuff, Poochos. (Rudd has three grown children from his previous four marriages: Jeremiah, 39, is an economist at the Federal Reserve. Michelle, 37, is a veterinarian in the
Rudd also lectures around the country and is working on a proposal for McGraw Hill to write two books on investment analysis. Locally, he appears most Thursdays on SNN Local 6 television. He also teaches basic and advanced investment analysis at the
And while investing in the market is off limits to Rudd because it is a conflict of interest with writing the newspaper columns, he does have another investment in mind.
On his third date with Diane, he took her to a horse show in
“We have picked out the farm we want,” Rudd says, “but we don’t want to drain our cash right now, given the current economy. It would be an unwise move.”
RUDD ON THE RECORD
Did you predict that the market and the economy would tank? Absolutely. In February 2008 I wrote, ‘There is little if any doubt that we are entering a recessionary cycle.’ The consensus then was that we would avoid a recession. I also warned [that] the subprime toxic securities were going to cause real difficulties on Wall Street and with the economy. I was saying this when the Bush White House was saying they knew nothing about any recession coming.
What’s going to happen in the markets? Nobody can predict what the markets are going to do on a daily basis. The events are random. Not all information is transmitted to everybody at the same time, contrary to what the academics say. And you have thousands of people trying to make up their minds about what they are going to do. What you can do is forecast the potential success of a corporation, using various indicators and their past impact on the market.
What is the trend right now? We will be heading out of this recession during the first quarter of 2010. Now, understand that what Wall Street does is approximately four to six months ahead of what the actual economy is doing. So my prediction is that Wall Street will recover by the end of this year. By recover, I mean the Dow Jones Industrial Average will be somewhere between 9,000 and 10,000, maybe 10,500. You’ll see the same type of thing with the S&P 500.
Where would you invest your money? I am a firm believer in investing in Wall Street. Your investment should take one of two forms. Either you are in bonds or you are in stocks. Five to eight years ago I was a firm believer in being mostly in equities. I have since come to believe you should balance your portfolio between cash, bond and equities. But the average investor is not capable of forecasting trends because he doesn’t have the tools. So I suggest you look for quality stocks and keep an eye on the fortunes of a company. You have to be more dynamic in managing your portfolio today than you used to be. The days of buying 10 stocks and holding them for 10 years is pretty much not a smart idea any more.
How much money did you lose this year? I personally am not allowed to own any stock because newspapers don’t permit it. It is a conflict of interest.
So you have no money in the market? None. And I don’t like mutual funds. I will not invest in mutual funds. I am totally opposed, diametrically opposed to mutual funds.
How have you been paying your bills if you write a column for free and you have no income from the market? I did research reports for years. You get $36,000 for doing four research reports, one for each quarter and at some point I was writing three, four or five of these a year. I was doing that every year for several years. Now I have income from Day Hagan. I have made considerable money over the years.
Did real estate ever figure in your investment advice or columns? Never. I know nothing about real estate. I have pointed out many times that housing prices traditionally do not increase 10 to 15 percent a year. This is no different from the dot-com era and no different from the 17th century Dutch tulip mania. We have been through this before. If you do trends on the economic data, you can see where things get out of synch [and] will come crashing down.
Do you see a permanent change in the way people should invest? Absolutely. You can no longer buy a company, hold it and hope for the best. You can buy a solvent company, but you must keep an eye on the company and the economy and recognize that through no fault of its own the company may find itself with lower earnings. It is like cars on a racetrack going 180 miles per hour when it starts to rain. The yellow flags come out and the cars slow down. There is nothing wrong with the cars; it’s the conditions in which they are racing. The sun comes out and the cars speed up again. Investing is the same way. What you want to do is get off the train when earnings start to turn down; if you see them turning up, you get back on. This is what we call trend investing.