Incorporated in 2000, Oak Tree Asset Management Ltd. is owned and operated by John E. Schultz Jr.. Now that you’re here, why not spend a few minutes and learn a little bit about John…
John Schultz started his career on Wall Street in the summer of 1969 at the age of 16. His first opportunity was working for a broker named Henry Quigley and Henry’s newly formed brokerage in partnership with Richard Goforth, a former specialist on the Pacific Stock Exchange in L.A. John’s first job with the brokerage was to drive Henry from the Newport Beach office to Hollywood every day for a TV show on LA’s financial TV station KWHY-TV. During the show, John would work in the news room breaking down news articles for the KWHY news anchors to use on the air. It was an exciting era and John met many important and influential people of the time, including Gene Morgan. Gene was made famous by his popular show called Charting The Market. Others of note included Gene Inger, one of the best and most intuitive market writer’s of our time, along with news anchor’s George Shart, and Terry Mayo, among many of others. Interestingly, John is still friends with Gene Inger all these years later.
At the age of 20, John became the youngest stockbroker (at the time) in the State of California by passing the new “Series 7” broker exam. Shortly thereafter he was hired by his sponsor Cruttenden, Gust and Merhab, a brokerage firm in Newport Beach, Ca..
In 1974, Mr. Schultz went to work on the floor of the Pacific Stock Exchange, a majestic old building built in 1931 and located on Spring St, in downtown Los Angeles. His goal was to learn and understand everything about the stock market ‘specialist system’ and how it worked in creating ‘efficient trading markets’. It turned out to be a very exciting, successful and rewarding experience.
By mid 1975, John was back from the Pacific Stock Exchange and again working for Cruttenden, Gust and Merhab. Shortly there after the firm became part of Hornblower, Weeks Hemphill, Noyes, at the time the seventh largest stock broker in the country and founded back in 1888. After a number of mergers, Hornblower became Shearson, and by 1982 John had moved on, enticed by an offer from Paine Webber.
Although working full time, John was still able to finish up college and graduated from California State University Long Beach, with a Bachelor of Science in Business Administration in 1977. During his studies at Long Beach, John was awarded the Investment Genius Award in Fall 1974 by the School of Business. (this while also working as a stock broker and full time on the floor of the Pacific Stock Exchange).
After Paine Webber, in 1983 John was asked by long time friend Walter Cruttenden to be a part of a new brokerage firm he was building, Cruttenden and Co.. The firm Cruttenden and Co. later became Cruttenden Roth and ultimately, Roth Capital in Newport Beach, California. Walter Cruttenden became most famous for and was the innovator of the Cruttenden Small Cap Growth Conference, now referred to as the Roth Capital Growth Conference. Walter and John still talk regularly. Of note, Walter Cruttenden and his son Jeff are the co founders of a new start up called Acorns, www.acorns.com. In recent conversations with Walter, he indicated that Acorns has reached over a billion dollars under management, an incredible feat. Even more interesting, Walter Cruttenden has a new startup project called Blast and it is in a new category called investable gaming technology. Stay tuned, this may be another home run.
By 1986 John wanted to take advantage of statistical opportunities he saw in stock markets, real estate markets and other interesting risk propositions, and moved his full time efforts to CSG Spectra Inc., which he had personally formed in 1984 as a risk analytics firm . From 1984 to 2000 John and his computer programmer’s built computer algorithms on a variety of situations that involved risk probability outcomes. This proved to be an extremely profitable experience and still is to this day.
By 2000 Mr. Schultz could see the immediate opportunities presented in stock market day trading volatility and formed Oak Tree Asset Management Ltd. By 2006 John had during the previous 6 years traded billions dollars in managed LLCs entities. Soon thereafter in by 2007 John could at this point see that markets and volatility were on an unsustainable pace and setting up for potential disaster, it was just a matter of time. Because of this John was already making preparations to change gears from a short term trader to a research oriented analytic and longer term investor. Interestingly, much of John’s early directional research involved companies associated with a relatively unknown quasi government CIA controlled investment entity called IN-Q-Tel.
Fast forward to 2007- 2009, and we had a period of unimaginable excesses, and then devastation as the financial crisis hit the world head on. Out of this came a new bull market, but one different then any before. The new paradigm consists of low interest rates, huge corporate borrowing to finance dividends, and specific targeting of company buy backs solely to help earnings grow while revenues are stagnant or falling. Lacking in this paradigm is new capital spending needed to help fuel innovative corporate growth similar to what had so successfully pushed past bull markets of 1982 thru 2000. Yes, this time it’s different, and it really is. Currently the question most asked of John is “when does this (government manipulated) directional buying stop”, can capital be repatriated from abroad in timely manner, and will corporate capital expenditures become a growth area fueling the future into the early 2020’s. The answer is he doesn’t know, nor does anybody know the timing of a market change. The markets will stop advancing when governments lose control of things (again), and it will most likely involve something different then subprime loans which took us down back in 2007-2009, yes it will likely end in a disaster, but nobody knows when or what the trigger will be. Best guess is it will assuredly be caused by something involving record amounts of derivatives, and in an area that nobody gives much thought to when the problem starts. (A few possibilities might include China’s rapidly rising debt and economic slow down, huge tariffs or currency devaluations around the world, war in the Middle East … or a natural disaster such as a super volcano eruption in Yellowstone National Park or earthquakes elsewhere along the US west coast ring of fire) and add one more, a targeted electromagnetic pulse attack possibly from an adversary. An EMP attack can be caused by the sun, by a nuclear EMP (NEMP) in the atmosphere, or a non-nuclear electromagnetic pulse (NNEMP). Because of these potential problems we are relatively balanced in our investments with a bias to buying any significant dip of 5-10%.
John is now an independent investor, is represented on 6 corporate boards, one of which is a publicly traded company, Applied Energetics, OTC Markets, with ticker AERG . Research will be more important then ever going forward and it’s what John is very proficient at. John targets unique early stage genesis investment ideas, including areas of undervalued companies with forward growth in both sales and earnings, and often selling at discounts to book value. It is where Schultz thinks the intermediate to longer term out sized potential returns reside.
We hope you enjoyed this historical date line from John Schultz’s past. Please visit me at LinkedIn for my latest thoughts on unique outside the box ideas in the investment world.
May the market Gods shower you with great wisdom and a profitable stock.
John E Schultz Jr.
Oak Tree Asset Management Ltd.