Lex Fridman did a great podcast with Bill Ackman (a famous activist investor).
Ackman does the exact opposite of what I preach.
I’m all about passive investing while he only does active investing.
But I loved the conversation.
Because I think it shows you what successful active investing really takes.
Bill Ackman’s company only invests in a few select stocks at a time.
They research these companies exhaustively. . .
model their financials. . .
make sure the stock price is attractive. . .
and then, after buying, Bill doesn’t just sit there and wait to make money.
No. He gets on the board and influences management.
In many cases, he gets the company to change course by 90 degrees.
This kind of active investing I can believe!
It’s really entrepreneurship as much as investing.
So if you want to go to college or business school …
Learn finance…
Get years of real business experience …
and then do active investing where you don’t just analyze companies for months – but you go fight management to get them to change course. . .
That’s great.
Done like that, I’m sure active investing can work. Bill Ackman is a clear example of that.
But if you don’t want to do the work, you won’t get the reward.
Most of us don’t want to devote our lives to activist investing.
We want to pursue our passions or prioritize our families while investing on the side.
And in that case, there’s no better investment than an index fund or ETF.
In fact, despite being a famous activist investor, Bill Ackman gave a shoutout to index funds in the podcast.
Because with these funds you can get really good results with barely any effort.
The active vs passive debate gets too heated sometimes.
The truth is, both approaches can work great if done right.
Either type of investing is much better than not investing.
The important thing is to pick your path and start taking action.
Because action today means freedom tomorrow.
Watch the full episode here:
https://lnkd.in/dEeGQhDp
