Download Warren Buffett's SECRET Investment Checklist for Completely free: thecompoundersclub.ck.page/00...
Billionaire investor Bill Ackman just shared his secret 5 step formula for successfully investing in the stock market. This simple strategy has helped make Ackman and his investors BILLIONS of dollars investing in stocks. The beauty of this process is that you don’t have to have a degree from Harvard like Ackman to begin implementing it. You need to hear what Ackman is about to say because it’s nearly guaranteed to make you a better investor and help you make more money. Make sure to stick around to the end of the video because number 5 on the list is my personal favorite. Let's get into it.
In a recent interview on the Lex Fridman podcast, Bill Ackman laid out his investment process in a simple, easy to understand way. Ackman’s investment process focuses on 5 key tenants that we will cover throughout this video. The first investing tenant is the concept of Mr. Market.
As counter intuitive as it may seem, one of the biggest secrets to successfully investing in the stock market is to actually completely ignore the stock market. Here, let me explain what I mean with a quick story.
The perfect analogy to demonstrate this concept is to imagine you own the most popular restaurant in your city. Picture what the most popular restaurant in a city looks like. Every table is always full. Guests have to reserve a table weeks in advance to even be able to eat here. The food is so good, customers don’t even care about the price. You as the owner could charge essentially whatever you want, customers will gladly pay it. Your restaurant has built such a loyal following that everyone in the town knows and loves the restaurant. It has become a staple in the community.
Out of the blue, you start getting text messages from a random person you have never met offering to buy your restaurant. Literally every second between 9:30am and 4pm Monday through Friday, this person texts you how much they would be willing to pay. The price fluctuates up and down by the second based purely on the mood of this particular person.
Would you as the owner base how much your restaurant is worth on these price quotes you get from a moody potential buyer? Of course not! You would block this stranger who keeps trying to influence you on how much your business is worth. Instead, you would look at the quality of your business and how much cash it generates to get an estimate of how much your restaurant is worth.
Value investors like Ackman say you should take this same logic and apply it to the stock market. Ignore the short term price movements in the stock and instead focus on the underlying fundamentals of the business for which the stock you own represents a fractional ownership stake in. As legendary investor Warren Buffett has famously said, “Only buy something that you would be perfectly happy to hold if the stock market shut down for 10 years”. Incidentally, Ackman says he learned most of what he knows about investing from Warren Buffett. We’ve compiled a PDF of Warren Buffett’s Investment Checklist items for you so you can start investing using the same process as superinvestors like Buffett and Ackman. To get your free copy, head to the link in the description. Anyway, back to Ackman, the next item on his list is how to value a stock