The Floating University

If You're So Smart, Why Aren't You Rich?

Everything you need to Know About Finance and Investing in Less than an Hour.

WILLIAM ACKMAN, Activist Investor, Hedge-Fund Manager

Lesson Overview

We all want to be financially stable and enjoy a well-funded retirement, but we don't want to squander our hard-earned money on poor investments. William Ackman, the CEO of Pershing Square Capital, is here to tell you Everything You Need to Know About Finance and Investing –– in less than an hour. In this powerful lecture, Ackman navigates the complex landscape of how businesses work and how to make smart investments following a simple business model we can all relate to: a lemonade stand. From balance sheets and growth assumptions to the difference between debt and equity, by the end of the hour you will have a working vocabulary of financial terms. Why did Albert Einstein say the most powerful force in the universe is compound interest? Through questions like these, you will learn both what it takes to finance and grow a successful business and how to make sound investments that will allow for a cash-comfy retirement. The principles outlined in this lecture will also benefit your decision making when it comes to major financial decisions like buying a home, providing for a family, and developing your career.

Why would you as a business owner consider a taking loan over issuing stock? How can you generate enough cash to live on while you are growing your business? What advice would an expert investor give his own mother about investing? In this hour you'll get a personal introduction to the world of business from an expert adviser –– a solid foundation on which to invest in businesses and begin building your own company. Whatever your goals in life, smart investment strategy will help you to achieve them.

Readings

Discussion Questions

(1.) Do you agree that Coca-Cola and McDonald's are businesses with "wide moats" and likely to be around and profitable in 50 years? What other business that you know of do you think is likely to be as successful in 50 years as it is today? How might current businesses based on internet technology, like Netflix, ensure their long-term survival?

(2.) Assume you just won $100,000 in the lottery. How would you invest it? What would you do if you were responsible for investing the endowment of your college or university? How would this differ from how you might invest the money you won in the lottery? Why?

(3.) How might the investing principles set forth in this lecture be applied to making everyday decisions? What can finance and investing teach us about decision-making in general? Share your thoughts with the Floating University community. 

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About William Ackman

William Ackman is founder and CEO of Pershing Square Capital Management. Formed in 2003, the hedge-fund has acquired significant shares in companies such as JC Penney, General Growth Properties, Fortune Brands and Kraft Foods. Ackman advocates strategies of "activist investing," the practice of using stock shares in publicly-traded companies to influence management practices in a way that benefits shareholder interests.