Interview with Timothy Sykes – An American Hedge Fund

By: Michael Dunlop     Topics: Entrepreneur Interviews

After receiving $12,415 in Bar Mitzvah Gift Money he hit the stock market and turned it into $1.65 million. He got started in 1999, while still in high school. His parents gave him control of the Bar Mitzvah Gift Money, thinking he would lose it all quickly and that the loss would be a great lesson for him. The markets were going wild and he was nursing a tennis injury so he had all the time in the world to learn about the stock market.

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Who is Timothy Sykes? What you have achieved?

I’m just a normal guy with a not-so-normal work ethic. For the past decade, I worked my ass off researching, stock trading and learning about the financial markets. Even though I’m only 26 years old, I’ve already been blessed by three major events in my life—turning my $12,415 Bar Mitzvah Gift Money into $1.65 million, getting too cocky and losing $700,000 of it on one stock and starring in the hit TV show Wall Street Warriors. Surprisingly, they are all connected and they’ve helped me realize how little people understand about financial speculation. It’s time that somebody detail everything, for better or worse, so people can understand what they’re getting into before it’s too late.

What inspired you to take that risk and to start trading on the stock market?

 

I got started in 1999, while still in high school. My parents gave me control of my Bar Mitzvah Gift Money, thinking I’d lose it all quickly and that the loss would be a great lesson for me. The markets were going wild and I was nursing a tennis injury so I had all the time in the world to learn about the stock market. At first, I wanted to be an investor, but I was too impatient for that so I quickly became a day trader. Ironically, my parents were proven right since my journey has taught me more than I ever thought possible about money, but instead of losing it all, I became a millionaire.

What were the main challenges you faced?

Trying to adapt from the greatest bull market the world has ever seen to a nasty bear market to a much less volatile market environment. Oh yeah and there’s not much personal detailed trading experiences aka no mentors for what I do, the companies I trade are too small ($100 million is small on Wall Street!) so there’s no research (forcing me and others to resort to internet message boards), getting too cocky after making my first $1 million by age 22, golddiggers, SEC regulations that prohibit the spread of information, society’s bias against financial speculators, a 40% tax rate, my lack of trading discipline, an addiction to daily profits in the thousands…hmmmm, that about covers it!

What single factor would you say helped you the most in getting to where you are today?

My work ethic—I don’t stop until I know there isn’t anything more I can do to help give me the best possible chance of success. Sometimes this requires 20-hour days, sometimes 2-hours, it all depends on the opportunity.

 

Did you ever think you would be so successful?

Yes. I didn’t know it would happen so quickly, but I knew that if I worked harder than everyone else, I would eventually succeed. I’ve always been willing to sacrifice my social life, relationships, health, traditions, whatever to get the job done. It’s the gift and the curse because a balanced life is preferable, but I’ve never been very good at balance so why start now?

If you could go back in a time machine to the time when you were just getting started. What business related advice would you give yourself?

I would smack my young cocky self and say “Hey idiot, you made a few bucks in the market, now shape up and learn to be conservative or else you’re gonna screw up big time!” But then my future self would travel even further back in time and stop my present self from talking to my past self, preventing me from giving that warning while insisting, “No, screw ups are necessary because there is no other way to teach these kinds of lessons without firsthand experience. As much as we’d like to protect ourselves and loved ones from making mistakes, sometimes we need to let them make it because that’s life aka the ultimate educator.”

Do you think that entrepreneurialism is something that is in your blood? Or is it something that can be learned?

I’m not sure—I know that when somebody tells me it’s not possible or that I can’t do something, I get enraged and become determined to prove them wrong. I don’t think that’s in my blood—it’s just in my head (probably as the result of some early childhood experience that I’ve blocked out). But this determination doesn’t just apply to business—it applies to everything in life, it just comes out most often in business because I’m a financial speculator and I get told that what I do is impossible all the time.

Is there anyone that you look up to and model yourself on?

Winston Churchill, JP Morgan, Bernard Baruch—these were classic, legendary leaders from many decades ago and it’s difficult to find anyone comparable nowadays. I’m not saying there aren’t great business leaders now, but other than Richard Branson and Mark Cuban, they’re all cowards because they’re not willing to share all their experiences, the good, the bad and the ugly.

In my book An American Hedge Fund, my goal was not only for it to be inspirational, but it was also to paint a realistic portrait of business life so readers wouldn’t have to read yet another BS-sugarcoated-add-another-revenue-stream-to-my-current-career-but-I-will-teach-you-little-because-I-can’t-risk-hurting-my-reputation- type business book. It’s a sad commentary on the $2 trillion hedge fund industry that I had to close my hedge fund in order to release such a painstakingly honest book, but that’s industry reality and I’m glad I’ve done my part to open people’s eyes.

What is the best advice you have ever been given?

A rich and powerful fund manager once said to me, “I will not invest with you—not because I don’t like you, your trading strategy, your niche and your fund…I do…but because you haven’t been scarred yet.”

I didn’t understand it at the time, but now that I’ve earned my business scars, I do. Losing is a horrendous experience, but sometimes, it’s ultimately the path you must take in order to be able to accomplish bigger and better things down the road.

What is the best thing about being a successful young entrepreneur?

The girls. No, just kidding—girls prefer musicians and athletes. The real answer is the self confidence and lessons that you’ll acquire, which will last you the rest of your life. Whether you win or lose, you experience business life and because of that, you have a leg up on all the other people who waste their youth away in the name of fun. There’s always a time for fun, but if you really want to succeed in business, you better understand the kind of effort and work you’re going to have to do to get there.

What are your plans for the future?

Now that I’ve closed my hedge fund, I’ve created a publishing company, BullShip Press (the name stems from what I think most people on Wall Street are full of and certain SEC regulations—namely a hedge fund manager’s inability to advertise, talk to the press and to detail their business to anybody worth less than $1 million). BullShip’s debut products, the book An American Hedge Fund and the instructional trading DVD PennyStocking, signal the beginning a new era for finance, one that is filled with transparency, learning and understanding. I will continue to create financial products that cut through all the BullShip on Wall Street!

To aid me in this endeavor, I’ve created a new type of investment fund—TIM—short for Transparent Investment Management. On November 1^st, 2007, I went back to my Bar Mitzvah Gift Money roots of $12,415 with the goal of repeating my feat of turning this into $1.65 million, this time however, I intend to detail all my stock trades, investment ideas and thoughts on TimothySykes.com so everyone, wealthy and non-wealthy investors alike and even people who know nothing about the stock market, will be free to learn about financial speculation. No longer will these strategies only be available to a select few—everyone is entitled to hear about these oh so dangerous investing techniques so everyone will be able to practice safer and more profitable investing.

You have released a book on how you made it on the stock market, tell us about it?

Already have above—c’mon, I’m a businessman! Business is my life and my book is my life story.

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