Carl Icahn is the billionaire owner of Icahn Capital Management. At 80 yeas old, he is worth $17 billion and is one of the most successful investors in the world. Some of his holdings have included Time Warner, Yahoo, Clorox and Blockbuster Video. His story in investing began when he was in college. In these early years, he learned the game of poker while playing with rich cabana owners in the Rockaways. Through shrewd playing tactics, Carl made $2,000 every summer. Later on after university, he became a stock broker. This was his job throughout the 1960s.
This is where he would exploit the price differences of stocks across markets and make a profit on each trade. In the 1980s, he moved on to become a shareholder activist. In this role Carl bought large amounts of shares in companies. Today, he is very wealthy and runs a hedge fund.
Here are the 8 success lessons from Carl Icahn – “Self-made Billionaire” for entrepreneurs,
1. Strive to become a value investor
One of the things that Carl Icahn understands is that a stock is a share of an actual business and not just a document. Thus, he approaches investing with the mentality that he is buying a share of a business and not just something that other investors want. He advises that if you want to be successful in investing, understand the businesses whose stock you want to buy. This takes time, effort and is well worth it.
2. Invest in good potential assets
One of the indicators of the productivity of a business is pricing power. Carl Icahn says that it is important to understand how this power works. Some of the elements in this concept are wholesale transfers and moats. This pricing power changes over time and affects the productivity of a company. If you can understand pricing power and use it to your benefit, you will be a successful investor.
3. Invest in undervalued assets
Carl Icahn indicates that the system of stocks and investment is not perfect. People make mistakes and underprice a particular asset. In this way, it seems to be less valuable than it actually is. The trick to becoming successful is to find these underpriced assets and invest in them. When the market realizes their value and the stock price rockets, you can cash in and make a fortune.
4. Bet on best ideas
Make sure that you have some bold conviction behind every stock purchase that you make. This is a lesson in investing that Carl Icahn lives and practices every day. In his portfolio, three investments make up more than 50% of his entire holding. These include AIG, Icahn Enterprises and PayPal. He bought the stock on the idea that these are solid companies with productive futures and that is exactly what they turned to out to be.
5. Love what you do
Being a billionaire, Carl Icahn has more than enough capital to live the good life. He can afford literally anything in the world. However, he spends little of his time buying luxurious things and most of it playing the game of business. His billionaire friend Charlie Munger indicated that an extra $2 billion is one of the most insignificant things to an old man. This lesson teaches us that the activity of investing should not be about the money but the love for what you do.
6. Stay away from herd mentality
In the world of investing, if something is popular among the masses, it is generally wrong. This form of shared collective opinion is known as herd mentality. Carl warns against this form of group thinking. He indicates that if you go along with a popular trend, the momentum will eventually fall apart and leave you in ruin. Thus, he often buys share in companies that are not currently popular.
7. Be patient
Carl Icahn lives by this lesson. He says that the best position in life is to be patient in your daily dealings. You should also be highly aggressive when it is time to perform. People who sit on their hands do not exploit opportunity. This lesson teaches us that those who act impulsively and display hyperactivity are bound to fail.
8. You are going to have cycles
Every investor goes through a rough period, at times you are in the zone and other times you are going through a rough patch. Unfortunately, a majority of investors, from retail to institutions chase performance, they tend to want to go with what was just really hot and dump what has not been performing. This is probably the biggest mistake that investors consistently make.