The founder of Pershing Square Capital Management, Bill Ackmanrevealed that the book “The Intelligent Investor” by Benjamin Graham it was the catalyst for his investing career. Interestingly, the same book played a major role in Berkshire Hathaway CEO By Warren Buffett life.
What happened: In a discussion with tech YouTuber Lex Fridmanreleased earlier this week, Ackman revealed that the first investing book he read was “Intelligent Investor.”
He said the book, written after the Great Depression and World War II, was aimed at the common man. It emphasized the importance of distinguishing between price and value, a lesson that Ackman has applied throughout his career.
See also: Bill Ackman Earns Over $600 Million on a Handful of Stock Bets and Becomes Top Earning Hedge Fund Manager
He said, “It’s for the average man, and it basically says you have to understand the difference between price and value. Price is what you pay, value is what you get.”
It also exposed Graham’s perception of the stock market as a short-term “voting machine,” reflecting speculative interests and supply-and-demand dynamics. However, in the long term, the market acts like a “weighing machine”, offering a more precise valuation of a company.
“And so if you can define what something is worth, then you can really take advantage of the market because it’s really here to help you. And that’s kind of the message of the book,” Ackman said.
Because matter: Ackman’s investment philosophy is deeply rooted in the principles learned from the “Intelligent Investor.” He seeks “seamless businesses” that will be more valuable and profitable a decade from now, even if the stock market shuts down.
Previously, Buffett had also said that his perspective on investing had changed after delving into his mentor and professor’s book, prompting him to shift from buying stocks to acquiring companies. Since then, his investment approach has been characterized by a long-term perspective ranging from 10 to 20 years.
Later in the conversation, Ackman was also asked about factors that signal a company’s potential to grow into “something that will bring in a lot of money.”
In response, he said: “What we look for are these seamless businesses: a business where you can close your eyes, the stock market closes for a decade and you know that ten years from now it will be a more valuable business, more profitable company” .
The interview also touched on Ackman’s positive stance on Google, OpenAI, ChatGPT’s parent company, Donald Trump, Elon Musk’s X, formerly Twitter, and free speech.
Read next: Bill Ackman breaks Wall Street barriers and launches the Pershing Square fund for retail investors
Disclaimer: This content was partially produced with the help of Benzinga Neuro and has been reviewed and published by Benzinga Editors.
Photo by Center for Jewish History, New York via Wikimedia Commons