Bill Ackman: Invest with peace of mind

In this interview, Bill Ackman, CIO at Pershing Square Capital Management, explains that knowledge and confidence to invest takes time to build. As an investor, you should accept that large price fluctuations are natural and learn to develop a more ‘hardened’ approach to market fluctuations.

He also recommends building an emergency account and avoiding debt so that market volatility affects you as little as possible. This allows you to remain rational and make sensible decisions – even when it looks like the stock market is about to collapse.

So key is getting yourself to a place where you’re financially secure, you’re not going to lose your house. That’s kind of a key thing. And then also doing your homework.

Stocks can trade at any price in the short term. And if you know what a business is worth and you understand the management and you know it extremely well, it doesn’t bother you when a stock price goes down or it has much less impact on you because again, as Mr. B. Graham said, the short term, the markets are voting machine. […]

So it’s a bit some combination of being personally secure and also just knowing what you own and over time you build callouses, I would say.

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