You may have heard the name Carl Icahn before. He's a legendary investor, former corporate raider, and is very often in the popular press for his activities as a forceful activist investor.
He's also the richest man on Wall Street.
But the more I learned about Icahn, the more I realized that his wisdom could be applied to far more than just investing -- the man is an unwitting guru whose money-making philosophy can also teach us something about life.
Don't be a Follower
"My investment philosophy, generally, with exceptions, is to buy something when no one wants it."
Icahn likes to invest in companies that are undervalued, which often means that they're completely out of favor on Wall Street. He's known for being a savant when it comes to company valuations, but in the end, his approach is simple: Focus on the business model, understand the balance sheet, and identify the prospects.
In other words, instead of listening to conventional wisdom, Icahn does his own homework and goes his own way. This lesson can be applied to much more than investing.
Be like Icahn: Learn as much as you can about the topic at hand, do your homework, and then think for yourself. By going your own way and doing your own research, you'll have the space to see better opportunities and analyze them appropriately.
Of course, this puts a lot of responsibility on you and you alone -- but wouldn't you rather take control of your own success, rather than blindly following the herd?
Look Hard at Leaders -- And Learn to be a Good One
"CEOs are paid for doing a terrible job. If the system wasn't so messed up, guys like me wouldn't make this kind of money."
Icahn is known for shaking up management when he gains a foothold in a new company, and his take-no-prisoners approach is part of what makes him so successful. While most of us don't have the means to become an activist investor, we can and should take the time to consider leadership -- both in the companies we work for or invest in, and in ourselves.
The major problem with the leaders of companies is that their incentives are not always aligned with anyone else's. Most employees and shareholders may want long-term health and sustainable growth, but executives are often rewarded for short-term gains. The result is short-term thinking and bad decision-making.
Look hard at other leaders, whether it's your own or a company you want to buy shares in. Take the time to understand who they are and what they're being paid for. Is the CEO a founder? Is his or her pay package tied closely to short-term performance, or long-term health? What does this job mean for that person?
Thinking about these questions will not only give you enormous insights into the companies you work for or invest in, it's a great lesson for approaching any relationship. Think about what incentives people are facing, and you might get some major clues about how they're likely to act.
Be an Activist
"In life and business, there are two cardinal sins... The first is to act precipitously without thought, and the second is to not act at all."
After closely studying his potential investments and their prospects, Icahn puts his money where his mouth is. He doesn't worry about what everyone else is doing -- in fact he seems to take a special kind of joy in going against the grain.
And after he's invested, he continues to act, this time as an owner.
If you've done your homework and made a decision, take a stand and participate. Whether it's executing an idea you had at work or as an investor voting in a proxy battle, participating is a major lesson that Icahn offers us. He's not always loved, and he's very often feared, but the man is not afraid to stand up to represent himself and his ideas.
No one is always right, but you can never know if you are unless you take the risk to speak up and take action. Take an interest in the world around you, invest in it, and act on your own behalf. Even if you start with just one thing -- work, your investments -- this habit is very likely to spread to all other areas of your life as well.
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