The Prudent SpeculatorIt was easy to lose hope in 1977It was easy to lose hope in 1977. Still recovering from the gas crisis, the economy had recently suffered successive years of double-digit market losses and double-digit inflation. Unemployment was the highest since the Great Depression.

Feverishly typing in a one-bedroom apartment was a man with hope. Clack–clack–clack, hammering the typewriter keys. Then a mistake. Back-back-back, retyping over the error with correction tape. Again, clack-clack-clack, thoughts committed to paper. Hours passed and it was complete.

AFAM Capital started with a lone typewriterOn a March morning in 1977, Al Frank left his apartment with the first edition of The Prudent Speculator, at the time dubbed The Pinchpenny Speculator. Four pages, double-spaced. No electronic backups in those days, it was the only copy. Death-gripping his four sheets of paper, Al Frank headed to the copy shop and manually set them on the copier, waiting for page after page to come through the machine. All that labor for just 100 copies and the hope that they would catch on.

This is how you behave when you believe something at your core.

Al Frank, a relentless bargain hunter who believed in a diversified portfolio of undervalued stocks, began delivering his message in four pages, double-spaced, and just 100 copies.

His core belief came to life. Readers became subscribers, subscribers became callers, and gradually those callers, family, and friends asked Al to manage their portfolios

For ten years of growth, all is well. The firm has grown to just under 20 employees and hires a Computer Science student from the University of Southern California to assist in automating the office. John Buckingham was previously employed as a cold caller by a broker, where he would ride his bike 4 miles to work and keep his dress shirt and tie in his backpack. After John realized that cold calling was not his calling, the broker referred John to Al Frank and associates where he made $8 per hour learning about stock analysis and portfolio management, in addition to accounting and subscriptions.

Black MondayThen unsettling news erupts. Monday begins with a market crash in Hong Kong. Panic spreads and devastates European markets. U.S. markets open and lose 22% of their value. The date is October 19, 1987 – Black Monday.

Pandemonium sets in. Phones ringing and ringing. The same message with every call: “Sell-sell-sell.” Overwhelmed by calls, Al Frank shouts, “John, get on the phone and calm these people down!”

As the market slowly recovers, Al discovers John has a natural talent for investing. On the side, John’s trips to Vegas and penchant for mathematics get him interested in turning a small sum into a large sum, in Black Scholes analytics, and in options. He begins to invest in that which he believes is mis-priced. He starts focusing his IT skills on investing and writing programs to find bargain stocks with better speed and precision.

Over time, Al Frank Asset Management became AFAM Capital. The investment team expanded, proprietary funds were formed and Innealta Capital was acquired (at a bargain of course).

Al Frank passed away in 2002, leaving a legacy that started as a labor of conviction in 1977. Just four pages, double-spaced and 100 copies revealed the benefits of value investing.

Experts noticed. Mark Hulbert and The Hulbert Financial Digest ranked The Prudent Speculator newsletter #1*. Others like Bloomberg and CNBC have noticed as well. Fox Business even said “for 15 years, you’ve quietly beat Buffett’s record…**

john-buckingham-cnbcRecently, John Buckingham was on a press tour in New York City. The PR agent offered to order a town car to take them on their various stops around the city (CNBC, Bloomberg, et al). John replied, “No, let’s take the subway.” Then he stopped at a hot dog stand for lunch. What can we say – old habits die hard. We are relentless bargain hunters. It’s at our core.

On October 1st, 2018, AFAM Capital along with The Prudent Speculator were acquired by Kovitz Investment Group. No changes were made to the individuals involved in writing and delivering Newsletter content to its loyal followers. Kovitz is a wealth management firm with a multitude of services whom recently was ranked number 37 in Barron’s Top 50 RIA list.

Hear directly from John

What gets him up in the morning? What does he think about investing?