The Mindset of a BILLIONAIRE INVESTOR | How Bill Ackman Makes His MONEY

look at the most successful people in the world I know very few them that haven't had a major failure the investing business you can learn by reading you know read everything Warren Buffett's ever written watch every YouTube video he's ever appeared in that's a great way to learn about investing to be a successful investor you have to be able to avoid some natural human tendencies to follow the herd need motivation he's Bill Ackman and here's my take on his top ten roses success enjoy [Music] okay let's kick it off with rule number one overcome adversity I don't know they're very few people you look at the most successful people in the world I know very few then that haven't had a major failure you know if you read through the they're not the financially most successful people if you look read for the Forbes billionaire list and you read their stories you know they've had failed businesses and they've lost everything and they've hung on the you know they almost died holding on to the ledge you know what's his name the guy on CBS and some of their fires some redstone redstone so there are lots of examples of people who had huge adversity and I think it's how you deal with adversity that determines your ultimate success as opposed to how you deal with success that determines your ultimate success rule number two study success the investing business you can learn by reading you read everything Warren Buffett's ever written watch every youtube video he's ever appeared in that's a great way to learn about investing but in fact investing is more than just the way to really understand investing is to understand a business and one of the most important skills you need as an investor is distinguishing between a great business a good business a fair business and a bad business and one way to get a sense of the quality of businesses go to work for one so the recommendation I give to people graduating from business schools these days is this is the greatest time in history to work for a startup lots of incredibly interesting businesses being formed if you can be one of the early employees you're gonna learn a lot about how our business works how to make payroll how to market your product how to design something and those skills I think are invaluable first of all you might even find it really interesting you might have joined the next Facebook so that's one thing even if the business fails you'll learn a ton from that I think that's the best experience you can get ultimately to be a good fundamental investor rule number three invest well how do you be a successful investor now I'm assuming that you're not gonna go into the business of investing I'm assuming that you're gonna be a doctor or lawyer you're gonna pursue your passion but you're gonna have some money they're gonna save over time and I'm gonna give you my advice on the topic it's not necessary defendant advice but it's what the advice I would give my sister my grandmother on what she should do if you were in the same and avoid investing in start-up businesses where the prospects are not very well known because again you don't need to make a hundred percent a year to have a fortune you just need to invest at an attractive return 10-15 percent over a long period of time your money grows very significantly so how do you avoid the riskiest investments I would my advice would be to invest in public security invest in listed companies companies that trade in the stock market why because those businesses are tend to be more established they have to meet certain hurdles before they go public the stocks are liquid so you can change your mind if you want to sell if you invest in a private lemonade stand it's hard to find someone to take you out of that investment unless that business becomes fabulously profitable that's a piece of advice number one invest in public companies number two you want to invest in businesses that you can understand what I mean by that is there are lots of businesses that you come in that you deal with in the course of your day and your personal life whether it's a retail store that you know because you like shopping there or it's a product your your iPad or that you know you think it's a great product but you know you understand how the company makes money the business is just too complicated you don't understand how they make money even if they've had a great track record I would avoid it a lot of people thought and wrong was an incredible business because it appeared to have a good track record but very few people understood how they made money it was good to avoid it another very important criteria is you want to invest at a reasonable price it could be a fabulous business that's done very well over a long period of time but if you pay too much for it you're not gonna earn a very good return the last bit is that you want to invest in a business that you could theoretically own forever the stock market were too close for 10 years you wouldn't be unhappy what do I mean by that now again if you're gonna compound your money if at 10 or 15 percent return over forty three year period of time you really want to business it you can own forever you don't want to constantly have to be shifting from one business to the next and what of what are businesses that you can own forever well the very few that sort of meet that standard may be a good example is Coca Cola right what's good about Coca Cola is it's relatively easy business to understand you understand how coke makes money right they sell a formula or syrup to bottlers and to retail establishments and they make a profit every time they serve a coca-cola people going to drunk a lot of Coca Cola for a very long period of time the world's population is growing they sell in almost every country in the world and each year people drink a little bit more Coca Cola so it's a pretty easy business to understand and it's also a business that I think it's unlikely to be competed away as a result of technology or some other new product right it's been around long enough people have grown used to the taste you know they make parents give it to their children and you can expect that we'll be around a long period of time rule number four be direct in my approach in business in my personal life in a management role is extreme candor and I think that if you live that way you know you'll run the risk of offending various people over time but you'll have much better relationships because you know if you tell people the truth first of all it's not typical you know a lot of people in the interest of politeness or fear of confrontation or it's just uncomfortable don't speak the truth and that goes for people on boards you know there are lots of examples of super talented people sitting around the room as an institution is failing think of all the banks during the crisis where people were not willing to confront the CEO so I'm willing to confront the CEO and but I'm completely candid with him about his successes and his failures also if you want to have more confidence checking my 250 for confidence series it's free the link to join is in the description below you have to explain why you're the right person to lead and above all you have to know your numbers I've always been passionate some people thought you know it's a it's more OCD than anything else the minute you begin to get external in your life worrying about what other people think about you right you vote you've lost all control you and it never fills you up rule number 5 be confident investing is about the best investments are the ones where we are the confident we're right and everyone else is wrong ok and you have to in order to be you know I've been accused recently of being arrogant among the know I'm gonna actually ask you that it was called it was pompous but that's ok pompous I don't think I'm pompous but I've been certainly been accused of being arrogant and there's a difference between arrogance and confidence yeah if you're arrogant and investing you're gonna get killed guide if you're not confident you'll never make an investment all right so you have to do a sufficient amount of work to be confident enough to have the conviction do something that's contrarian right we bought the stock of a a soon to be bankrupt retailer I'm sorry a shopping mall company during the financial crisis at pennies per share you have to be willing to look silly when you do something like that general growth stocks up 90 fold since our original investment you know on that's we had confidence maybe people thought was arrogant to believe that we'd be successful in turning around rule number six contribute it weren't invested what would you be that's a good question I mean I would do what I do now even if I weren't compensated for doing it because I think it's a way for me to make the biggest contribution that I can make I mean I look I think about government if I could if I could effectuate change the same way I can effectuate change in the in the private sector but I think I can have more influence as a private participant that a public participant rule number seven deal with criticism when this guy that I met money manager named Bob Chapman who I met on a panel seven years ago we were on a panel together show cans never spoken to him since I've never out of email correspondence I've never seen him since but in the last 90 days he's been running the talk show circuit on how I'm you know either wrong or stupid or arrogant you know give him quotes to Vanity Fair it's unfortunate you know I don't mind criticism but I don't I don't like reading things that are I don't you know it's hard to read they for somebody doesn't know me well to be commenting on what I'm like as a person I find I find it difficult but you know whatever I got it you have to have a thick skin to be in this business and you know if you end up in a very public situation you should expect to have fans and critics and you know I just try to focus on you know what my job is and we focus on making money for our investors and I live my life rule number eight learn your craft I went to business school to learn how to be a good investor and I learned the first rule of investing which is you do your due diligence before you wider than your money and when I got the HBS I actually opened the course catalog for the first time and there wasn't a class on investing in other classes on accounting or classes on Finance so I decided I had to develop my own little self study program and I wanted to so I opened a fidelity brokerage account I said this I had some money I've made in the real estate brokerage business this was my tuition in the investment business and it was about a year of tuition and if I lost it it was as if I had gone to a business school for you know two years but paid for three so I figured it wasn't like the the inverse of the Oxford one plus one program but and you know I the first stock I bought went up and I said okay I found what I want to do more involved in that but I I actually my father who's here he came with us that's dad over there in the corner you can ask him whatever questions you want afterwards he told me is a really dumb idea to start an investment fund right out of his in school and he recommended that I go work for Michael Steinhardt or George Soros or one of the other famous ambassadors at the time but I figured that I knew enough this is the the perils of youth but the answer is I was an entrepreneur and I felt that I wanted to approach investing my own way as opposed to learn from someone else and it's one of the few things you can really learn on your own you can learn investing by reading books by reading annual reports by having a you can have a portfolio and invest $100 and you can and you can learn the business unlike many other businesses which require a lot more rule number nine don't follow the herd to be a successful investor you have to be able to avoid some natural human tendencies to follow the herd the stock market's going down every day your natural tendency used to want to sell the stock markets actually going up every day your natural tendencies want to buy so in bubbles you probably should be a seller in busts you should probably be a buyer and you have to have that kind of a discipline you have to have a stomach to withstand the volatility the stock market and rule number ten the last one before a very special bonus clip is give opportunities you known for occasionally hiring people with some non-traditional financial backgrounds form a fly-fishermen a tennis pro someone you met in a taxi so what actually are you looking for so most of the people that we have on the investment team are people with more conventional backgrounds half the team worked at Blackstone in either private equity or Investment Banking a few guys from Goldman Sachs but I'm a big believer you know I had internships in my life and you know if I meet a great human being you know I want to give some you know people who didn't go to Harvard Business School and didn't work at Goldman Sachs for four years you know some exposure so I met the beginning of Pershing I met a guy named Oliver white who I believe is one of the you know he's become recognized one on top fly fishing guides in the world very smart interesting guy taught me fly fishing and I said look if you're interested in business and you want to intern at you learn something about it you know come work for me and Oliver came and spent 18 months with us you're taking a very outdoorsy guy and you're putting them in had in which is kind of an interesting thing he didn't like that part of it but you learn a ton about business and then he left he actually worked a lot on one of our proxy contest situations in the Ceridian we had a proxy contest one of the issues was the the CEO was using the corporate jet to do a lot of fly fishing junkets so we were able to track that stuff through his network of fly fishermen so it was a useful in the proxy contest anyway and Oliver left you know to do and I backed him to buy a fly fishing launch which the Abaco Lodge and in Abaco in the Bahamas and it's like you know 20% on levered return on capital and he's done an unbelievable job managing in and we hired a guy named Marius Adamski who I met on the tennis court super talented guy went to Wake Forest you know top tennis player and he you know offered him a job and he's worked for us for the last couple of years and he did a lot of the research on Herbalife and he did a phenomenal job so I just you know I was gonna go to business school because he's gonna he needs more training to come back into the business but I think it's a you know a nice thing to offer people those kind of well I was offered opportunities like now I've got a special bonus clip on making mistakes that I think you're gonna enjoy but before that it's time for the three-point landing questions let's go from just watching the video to taking action here we go question number one how can you give someone an opportunity this week number two what's the criticism that you need to deal with better and number three what three people will you study success from this month experience is making mistakes and learning from mistakes and unfortunately as students you haven't made many mistakes yet if you've gotten to Oxford at this point in your career the biggest risk is you probably haven't screwed up a lot and so you know the risk of that is when data comes across your desk that's inconsistent with your being successful you're less likely to pay attention to it than if you've made a few mistakes so I encourage you to make some mistakes and actually I've made plenty of over the course of my career and I think I've been very successful over time but it's not been a straight line up in fact I had if I were a stock it would look something like this after business school you know and then and so the concern is whether this is coming in fractured but but so far they you know the overall trend has generally been positive but now there are certainly bumps along the way if you want to learn from some of the world's most successful investors check out the video right there next to me I think you'll enjoy it continue to believe and I'll see you there I'm in a know called strike business which is the best business you can be in and you said that portfolio balancing is a waste of time so what are John and Sally

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Keywords: entrepreneur, yt:cc=on, richest man in the world, pershing square capital, bill ackman, billionaire giving advice, billionaire success advice, entrepreneurship motivation, bill ackman top 10 rules for success, billionaire investor, how to become an investor, how investor thinks, how to be successful investor, bill ackman interview, bill ackman speech, best of bill ackman, the mindset of a billionaire investor, how bill ackman makes his money

Id: eiA7IGfkchE

Length: 15min 32sec (932 seconds)

Published: Wed May 15 2019