Can you BEAT Mr.BUFFETT in EQUITY RETURNS in spite of going wrong 50% of the time?
January 25, 17
Can you BEAT Mr.BUFFETT in EQUITY RETURNS in spite of going
wrong 50% of the time?
Greetings from Hitesh! Many
readers have appreciated our last post on HEALTH / WEALTH and LEGAL ISSUES and
approached us for the guidance. Thanks for the same. Today we are going to talk
about STRATEGY to make tons of money in spite of going wrong in 50% of the
stocks.
How NORMAL INVESTORS See the INVESTMENTS?
They believe that they can make
money only and only if their all the stocks move up. They want something like
SURE SHOT investment ideas. Basically, they want everything EASY over SIMPLE -
Something for Nothing. I get lot of calls asking me about the NIFTY levels at
the beginning of each year. Normal Mind has mental impression that if market
goes up, they will make money. So, when they read that market would touch new
highs – they become happy for nothing!!
What are the FACTS?
Legendary investors have always
said – going wrong is NORMAL while investing. The
problem comes when you STAY WRONG!! Today I am going to talk about
one such WALL STREET personalities who has gone wrong almost 50% of the time
and made tons of money. Yes, I am talking about CARL ICAHN.
Carl Icahn has taken over the mantle of Worlds Greatest
Investor from Warren Buffett. Icahn has made a mind-boggling fortune from
stocks despite having a win rate equal to the toss of a coin. How he achieved
this remarkable feat is revealed by Bryan Rich of Forbes
Carl Icahn has an incredible investing track record, which
surpasses that of Warren Buffett.
Bryan Rich of Forbes has revealed in his article
Billionaire Carl Icahn's Winning Traits that Carl Icahn has compounded his
wealth at an incredible CAGR of 31% since the year 1968. Carl's return since
the year 2000 is an impressive 20%. He beat the S&P 500 by 4 to 1 over the
period.
In contrast, Warren Buffett has compounded his wealth at a
relatively modest CAGR of 19.5% in the same period from 1968 onwards.
In practical terms, if we had invested $1,000 with Warren
Buffett, it would be worth about $5 million today. The same sum invested with
Carl Icahn would be worth an eye-popping $400 million today.
This makes it clear that Carl Icahn has superior skill as
compared to Warren Buffett.
Rich has
analyzed Carl Icahn's investments from the year 1994 onwards and deduced that
the Billionaire's Win Rate is merely 58%, which is almost equal to the result
one would get from the toss of a coin.
Out of
the almost 100 stocks that Icahn purchased over the past 20 years, only a
little more than half have been profitable.
However, what has made the difference to the ultimate
result is that Icahn has put himself in the position *where a winning stock has
delivered disproportionate result. The winners are almost twice that of his
losers. While the average winner is +87%, the average loser is -49%.
(What it means that he has not sold loss-making shares but
not added to them. Instead he added in rising stocks!!)
Four takeaways of Carl Icahn's investment philosophy:
Takeaway 1 – An investor
need not have a high win rate. What he requires to ensure is that he does not
lose much on his losing stocks and wins more on his winning stocks.
Takeaway 2 – Make
concentrated bets where you are certain of winning big.
Takeaway 3 – Be patient -
There is no better way to explain this than to see Carl Icahn's interview where
he revealed the real secret behind his success is the fact that the real money
that I made
over the years is holding companies for 7, 8, 9 years and keeping them ….
Takeaway 4 – Don't be afraid
to take risks or to suffer losses:
Takeaway 5 - Stay alert to
changing circumstances and churn the portfolio.
One more takeaway that can be added to the four takeaways
listed above is that one must keep one's eyes and ears alert to changing
circumstances. We call it GROUND REALITIES in DESTINY MANAGEMENT.
What he SAID ABOUT the NORMAL GUYS?
He has said there are only two sins NORMAL GUYS commit. They act without
thinking properly or they do not act at all.
Most guys do not act when market
is down and when market goes up – they come and buy without thinking. They
never make money due to this and then they blame their LUCK / MARKET. Due to
above two qualities – they never make big money and they end up wrongly
concluding that it is difficult to make money from stock market.
What NEXT?
I have devised TRADING and
INVESTMENT SYSTEM from the experiences of the GREAT investors like CARL / BUFFETT
/RAKESH / SOROS and many others.
I teach them FREE of cost to all
my clients to make a lasting difference in their LIFE and in their generations.
If you want to make a DIFFRENCE in your LIFE – do approach us NOW.
Have a GREAT LONG WEEKEND.
Live With
Passion…Invest With Passion.
Hitesh Parikh.
Comments
Post a Comment