A mutual fund entrepreneur is using a new strategy to invest his money. To test whether his investments are sound, 42-year-old Nicholas Gerber sets up his own rival company to see how tough barriers to entry are, according to Dow Jones.
For example, when the new Linux software was thought to threaten Microsoft, Gerber tried installing the new the software himself. In the end, he decided his Microsoft was safe.
This is the tactic he has applied to the $1.4 billion Ameristock mutual fund he founded.
Even though Gerber's offbeat investing style has won over some people, some others, such as his mutual fund clients, fear that he's wasting time and money on elaborate initiatives.
"People don't like when we are abnormal in what we do," says Gerber. "After talking with me they see tremendous overlap in learning something and helping with the fund." He adds that once investors are assured that proceeds from the mutual fund aren't being used to test the waters, criticism dies down.
Bernie Kiely, the founder of Kiely Capital Management, a small investment firm in Morristown, N.J., that invests in Ameristock, backs Gerber's research approach. Kiely, who was drawn to Gerber in part because he started his Ameristock mutual fund from nothing out of an apartment in California, calls Gerber's research strategy an "interesting" concept.