Carl Icahn is one of the best investors ever. He says in order to be the best at something, you have to be a little obsessed. One thing I am obsessed about is achieving superior returns in the stock market. The first question you might ask is: “Isn’t everyone?” Surprisingly, the answer is no. The majority of people don’t want to put in the work, they are risk averse, and they rarely like to step out of their comfort zone. I’m not making fun of that, it’s just unfortunate that most people are ok with being average.
The second question is: “What do you consider superior returns?” Throughout history, the stock market has averaged 8-10% per year. The best in the business consistently average double that over their career. The key word is “consistent” because that is what makes someone the best at something. For example, Michael Jordan isn’t considered one of the best basketball players ever because he scored 30 points once in a game. It’s because he averaged 30 points per game consistently over a 15-20 year career. The equivalent for money managers would be to consistently produce strong returns over a long-term career.
The third question is: “How do you produce these consistent superior returns?” The answer is concentration. For example, in 2007, one of favorite managers Ken Heebner was up +80% for the year while the S&P 500 was only up +3.5%. How did he do it? He was concentrated in 15-20 of the best stocks from the strongest sectors. I remember it well because I was focused on the same stocks and I was up +72% that year.
Here’s the problem: With concentration comes increased volatility and most clients are not used to that. They are mostly used to passive ETFs and mutual funds. As a manager, one of my priorities is to educate clients about my process and stress the importance of patience. I have conviction that I will do consistently well over the long-term because I’m obsessed with it. I watch the tape all day, work on mental toughness, read lengthy research reports, perform post analysis of trades, screen for new potential winners, and watch unusual option activity, while also navigating through the market every day. Some people say I’m too obsessed but that’s just an excuse lazy people use to describe those dedicated to excellence.
I am opening my managed accounts product on January 1, 2018. If you are an accredited investor and seriously interested in a passionate money manager, please email me to setup a consultation: [email protected]
Disclaimer: This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained in this video constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. From time to time, the content creator or its affiliates may hold positions or other interests in securities mentioned in this video. The stocks presented are not to be considered a recommendation to buy any stock. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.