The Paula Gordon Show
BUY HIGH, GO HIGHER

J Morton Davis

. . . is Chairman of the Board and sole owner of D.H. Blair Investment Banking Corp, a Wall Street investment banking firm offering Initial Public Offerings (IPOs) for emerging growth companies working in biotechnology, medicine and communications. He has four daughters and 23 grandchildren and lives with his wife Rozi on Long Island, New York. His book From Hard Knocks to Hot Stocks (William Morrow &╩Company (www.williammorrow.com)) combines his remarkable autobiography with experience-based investment advise.

Excerpts3:30 secs

Every day, stocks tell you how to get rich. Go look at the short list of the day's "new highs," says J. Morton Davis, Wall Street investment banker and venture capitalist. Buy a little. ╩When that stock goes higher, buy some more. Davis made a fortune with his unconventional wisdom and is eager to share his secrets, so eager in fact, that he combined a self-help investment guide with his autobiography.

Morty Davis is a venture capitalist who specializes in funding emerging growth companies, targeting biotechnology, medicine and communications. He is also a former high school drop-out from Brooklyn who got an MBA from Harvard and made a fortune for himself and his investors on Wall Street. Now he wants to show other people how to make money investing while making the world a better place.

The future, according to Davis, belongs to the growth companies, the kinds of companies he funds. He thinks old companies (the so-called "blue chips") are like old people -- they pack on a lot of fat, become inefficient and suffer hardening of the bureaucratic arteries. Go instead for the hot young companies who will grow into tomorrow's big winners. And, according to Morty, all you need is one big winner to make you very rich.

Stocks, he believes, tell their own stories. He used to study companies until he know more about them than the CEO did. Now he jumps on a trend. Start small, cautions Davis. Buy a few stocks on the short list of new highs. Then as that stock goes up, buy more. If it slips more than 15%, sell it.

Davis believes there's safety in risk and risk in safety. And you have to be investing for the long term. Never put all you have at risk. If you need your money in the short term, make sure it's safe. When you are able to invest for the long term, take a small part of your funds and take a big risk with it.╩Keep the rest safe.

Davis does not believe in diversifying. He advocates putting all your eggs in one basket, then watching that basket very carefully. And never, ever buy short. The same for buying on margins. They turn investing into gambling and there's no limit to how much money you can lose. Go to Atlantic City if you want to gamble, he advises.

In addition to betting on the future, Morty Davis wants people to learn from his own "hard knocks" to make the world a better place and offers lots of ideas for doing so. Every day (and on average 100 hours a week,) Morty Davis ventures into the future, putting the "capital" into "capitalism." The ultimate goal of capitalism, says this quintessential capitalist, is to improve everybody's life. ╩That may be the best investment of all.

Conversation 1

"Morty" Davis tells Paula Gordon and Bill Russell how he grew from being a rebellious youngster in Brooklyn to make a living investing, created wealth well beyond his own imagination along the way. He describes his autobiography/investment guide.


Conversation 2

Davis compares the biotechnology and information technology companies he has funded with the industrial revolution. He describes the sweeping changes both will create in the future they are influencing. In advising listeners on how to invest wisely, Davis shows how the best (and legal) "inside information" is available to everyone, right in our own homes. He gives anecdotes of "small cap" companies that are among today's biggest success stories, comparing new companies to "widow and orphan blue chip" stocks which he says have gone nowhere in the past 40 years. He describes his startling "buy high, then buy more higher" philosophy.


Conversation 3

Morty Davis is infectiously excited about being a venture capitalist and tells stories of a number of his adventures with specific companies. ╩He explains why the person leading a new small company is key and describes what he looks for in deciding whether or not to invest in a person's venture. Davis suggests there may be a fundamental conflict between helping the world by building businesses and building a good home life. He explains why he thinks the stock market is more susceptible to psychoanalysis than it is to security analysis.


Conversation 4

Davis distinguishes between two quite different kinds of investing (and interrupts himself to praise Paula and Bill's Show,) explaining what he means by "there's safety in risk and risk in safety." He urges investors never to put all their funds at risk, keeping safe what one really needs. He explains why he does not think diversifying one's investments is a good idea and urges us to sell a stock immediately if it drops more than 15%. He elaborates on why a stock itself is the best indicator of how a stock will do in the market, returning to his "buy high, buy higher" strategy.

If you want to gamble, according to Davis, you should go to Atlantic City instead of buying short or buying on margin and explains why.


Conversation 5

Young people particularly can profit from Mr. Davis' approach, he believes, and shares with us his pleasure in the praise his book has received. He enumerates the three things he looks for when considering investing in an emerging company. He tells why it is important to fund women, minorities and young people who want to start businesses. He reminds us that new companies are where the new jobs are being created, as compared with the downsizing in Fortune 500 companies. Davis worries about the values America is exporting to the rest of the world, while praising the American people. He believes we are far better than our leaders and challenges us to get even better by making teaching an attractive profession again.


Conversation 6

Morty Davis advocates the United States government take on the work he does funding medical technologies. He declares it "tragic" that America spends more on one aircraft carrier than on the National Institutes of Health. He thinks the kind of "defense" we now need is against disease. He celebrates his Jewish heritage for prizing learning and suggests that capitalism's ultimate goal should be to improve everyone's life


Acknowledgements:

The Commerce Club in beautiful downtown Atlanta, GA, provided the perfect setting to talk about business and leadership. We thank all involved.


Additional Links:

From Hard Knocks to Hot Stocks is published by William Morrow & Company, Inc.


MEMBERS AND GUESTS OF THE COMMERCE CLUB OF ATLANTA DISCUSS THE ELEMENTS OF IPO'S WITH MORTY DAVIS.


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