William Ackman: Everything You Need to Know About Finance and Investing in Under an Hour | Big Think finance investment

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Everything You Need to Know About Finance and Investing in Under an Hour
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Bill Ackman is one of the top investors in the world, and he’s said that he’s aiming to have “one of the greatest investment track records of all time.” As the CEO of Pershing Square Capital Management, the hedge fund he founded, he oversees $19 billion in assets.

But before he became one of the elite, he learned the basics of investing in his early 20s.

This Big Think video is aimed at young professionals just starting out, as well as those who are more experienced but lack a financial background.

Ackman takes viewers through the founding of a lemonade stand to teach the basics, explaining how investors pay for equity, a word interchangeable with “stock.” In the example, the owner starts with $750, with $250 of that coming from a loan.
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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 Bands 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.
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TRANSCRIPT:

Hi, I’m Bill Ackman. I’m the CEO of Pershing Square Capital Management and I’m here today to talk to you about everything you need to know about finance and investing and I’m going to get it done in an hour and you’ll be ready to go.

How to Start and Grow a Business

So let’s begin. We’re going to go into business together. We’re going to start a company and we’re going to start a lemonade stand and now I don’t have any money today, so I’m going to have to raise money from investors to launch the business. So how am I going to do that? Well I’m going to form a corporation. That is a little filing that you make with the State and you come up with a name for a business. We’ll call it Bill’s Lemonade Stand and we’re going to raise money from outside investors. We need a little money to get started, so we’re going to start our business with 1,000 shares of stock. We just made up that number and we’re going to sell 500 shares more for a $1 each to an investor. The investor is going to put up $500. We’re going to put up the name and the idea. We’re going to have 1,000 shares. He is going to have 500 shares. He is going to own a third of the business for his $500.

So what is our business worth at the start? Well it’s worth $1,500. We have $500 in the bank plus $1,000 because I came up with the idea for the company. Now I’m going to need a little more than $500, so what am I going to do? I’m going to borrow some money. I’m going to borrow from a friend and he’s going to lend me $250 and we’re going to pay him 10% interest a year for that loan.

Now why do we borrow money instead of just selling more stock? Well by borrowing money we keep more of the stock for ourselves, so if the business is successful we’re going to end up with a bigger percentage of the profits.

So now we’re going to take a look at what the business looks like on a piece of paper. We’re going to look at something called a balance sheet and a balance sheet tells you where the company stands, what your assets are, what your liabilities are and what your net worth or shareholder equity is. If you take your assets, in this case we’ve raised $500. We also have what is called goodwill because we’ve said the business—in exchange for the $500 the person who put up the money only got a third of the business. The other two-thirds is owned by us for starting the company. That is $1,000 of goodwill for the business. We borrowed $250. We’re going to owe $250. That is a liability. So we have $500 in cash from selling stock, $250 from raising debt and we owe a $250 loan and we have a corporation that has, and you’ll see on the chart, shareholders’ equity of $1,500, so that’s our starting point.

Now let’s keep moving. What do we need to do to start our company? We need a lemonade stand. That’s going to cost us about $300. That is called a fixed asset. Unlike lemon or sugar or water this is something like a building that you buy and you build it. It wears out over time, but it’s a fixed asset. And then you need some inventory. What do you need to make lemonade? You need sugar. You need water. You need lemons…

Read the full transcript at .

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48 comments

Big Think 19/11/2021 - 11:05 Chiều

Want to get Smarter, Faster™?

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FACEBOOK 👉👉COLLINS ICEKING 19/11/2021 - 11:05 Chiều

⬆️⬆️⬆️ When ever I remember this man, I really fell amazed for meeting him is my savior I really appreciate sir for the 5 BTC

Reply
Helen Swerny 19/11/2021 - 11:05 Chiều

Having a dynamic strategy cannot be overemphasized when trading forex. The best advice I could give to any forex trader is don’t trade if you don’t have a working strategy.

Reply
Rose Vlogs 19/11/2021 - 11:05 Chiều

This should be taught in schools, at least the basics.
Bill is so charming 🤣

Reply
Mike D 19/11/2021 - 11:05 Chiều

Is it me or is the income statement math off?
– timestamp about 7 minutes.
The easy one to spot was 800 cups sold at $1.
That does not equal $850.
There are more too.

Reply
Beatty 19/11/2021 - 11:05 Chiều

talks about investing while making a investment into this video. Needless to say it paid off for him B)

Reply
Jonathan J 19/11/2021 - 11:05 Chiều

Several accounting errors on this.

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itworkss 19/11/2021 - 11:05 Chiều

What a great video.

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Wjester 19/11/2021 - 11:05 Chiều

Brilliant! Thank you.

Reply
Abhishek Sathe 19/11/2021 - 11:05 Chiều

Dude shorted the market before covid pandemic and turned a $27 million position into $2.6 billion. Probably one of the if not the greatest trades of all time.

Reply
Natalia Golicova 19/11/2021 - 11:05 Chiều

250 wpm, I took the time to count 🙂 can you possibly speak faster? 🙂

Reply
Jessica Allen 19/11/2021 - 11:05 Chiều

When you stop learning , you get left behind . Never stop educating yourself

Reply
Wikus Van De Merwe 19/11/2021 - 11:05 Chiều

Just buy Bitcoin

Reply
Tanny Zhu 19/11/2021 - 11:05 Chiều

RAN on the ASX. Good investment?

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Emma fuentes Baltazar 19/11/2021 - 11:05 Chiều

Yes love it godbless to all

Reply
Larry Bird 19/11/2021 - 11:05 Chiều

To be a successful Investor you have to have rich parents with great contacts, then loose lots of other peoples money until you understand what you are doing wrong, then tell poor people its easy to make money and get poor people to invest in your course!

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Gabriel Bertoncini 19/11/2021 - 11:05 Chiều

This class shold be worth a thousands dollars but you can hear a successful professional investor for free. Thanks!

Reply
TheThegreenpi 19/11/2021 - 11:05 Chiều

can someone explain to me how $500 invested turned into $1500 of value in the beginning

Reply
privacy matters 19/11/2021 - 11:05 Chiều

Another commenter below wrote this but hopefully this also saves someone else some time who thinks they didn't get math.

@elizabeth p. (commenter below)
Great explanation. Some typos though, to my understanding. At 7:43, the chart shows $850 in first year instead of $800. Also, I don't think year 2,3,4 Per Share should be negative. Also, Growth should be calculated differently from Negative to Positive: from year 1 ($10) to year 2 +$90, there is positive growth of $100 which yield 1000% Growth (positive).

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rrroop 19/11/2021 - 11:05 Chiều

Needs more sound effects

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Life Games to the top 19/11/2021 - 11:05 Chiều

This is 1 of the best learning videos about finance. 👌🏿

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squareeyes64 19/11/2021 - 11:05 Chiều

WOW What a good man!

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Hash KEK 19/11/2021 - 11:05 Chiều

Idk but i read his name Ackerman. Feelsweeb

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Patrick Thomas 19/11/2021 - 11:05 Chiều

Nice Video but I must say that I'm really tired of trading in losses myself. I've blown my account twice and it's frustrating. Please I need someone to help me trade or invest the forex or crypto market

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Rtpltd 07 19/11/2021 - 11:05 Chiều

Truly Bill Ackman way😊✌️

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Bella scott 19/11/2021 - 11:05 Chiều

Nice content. To me, trading the forex and crypto market is way better than any online investment 100💯

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Christopher Emeanua 19/11/2021 - 11:05 Chiều

He is knowledgeable, smart and intelligent presenter !

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Cool Girl 19/11/2021 - 11:05 Chiều

It is good without bad debts or gonna write off add loss to business

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anonymous1432341 19/11/2021 - 11:05 Chiều

Great video! I was hoping that he adds index funds in the end as an option for those who don’t have time or skill to pick stocks.

Reply
Alireza Asadi 19/11/2021 - 11:05 Chiều

Great video. Thanks.

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C. DR 19/11/2021 - 11:05 Chiều

If he updated this for 2021 I'm sure he would change the mutual fund recommendation to ETFs.

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Lucas Thomos 19/11/2021 - 11:05 Chiều

The year 2021 has been like a rollercoaster so far. The markets started off with a bang, with Redditors gathering and shaking up Wall Street by trading GameStop stocks. Then, Bitcoin started spinning the charts up and down, Ethereum surprised pretty much everyone with its price hikes, altcoins started booming like never before (just think about DOGE), new market actors even rushed in to join the race.

Reply
Aryan Kukreja 19/11/2021 - 11:05 Chiều

I have an eerie feeling of accomplishment after watching this at 1.25x.

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Abdullah Al Nafis 19/11/2021 - 11:05 Chiều

Answers all the questions at once.

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Neale F 19/11/2021 - 11:05 Chiều

Johnny: Gosh, we're gonna make a lot of money selling lemonade!
Susie: Yay! Like maybe hundreds of dollars.
Billy: Sorry kids, I forgot to mention, but I just bought up waxed paper cup futures and they'll cost three times as much now.
Johnny and Susie: Ohh nooo 😮
Billy: Don't be sad, business is tough. Haha, good luck suckers!

Reply
emptor01 19/11/2021 - 11:05 Chiều

Kinda skipped over ETF's and the lack of fees though …

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Angela Asadi 19/11/2021 - 11:05 Chiều

Great job! Thank you.

Reply
Walter Uwe 19/11/2021 - 11:05 Chiều

I watch several YouTube videos on how to trade in the stock market but haven't made any headstart because they are either talking some gibberish or sharing their story of how they made it and I do not want to make mistakes by taking risks in my own hands

Reply
Bảo!3589 19/11/2021 - 11:05 Chiều

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Петерсон Маркус 19/11/2021 - 11:05 Chiều

Every financial goal requires 💯 patience dedication and consistent spirit knowing that investing is currently the most lucrative business in the world, both NFT, real estate and Crypto shares are really positively changing people’s lives, I know the problems for technology believers will end soon

Reply
Kemar Roberts 19/11/2021 - 11:05 Chiều

Excellent material. I was stimulated.

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jonathan Stafford 19/11/2021 - 11:05 Chiều

Maybe I’m missing something but how is 500 33% of 1000 shares … I don’t understand

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Tram Nguyen 19/11/2021 - 11:05 Chiều

Great explanation!! Thank you sooo much!!

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idk how i do it 19/11/2021 - 11:05 Chiều

SHIB

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Jacob Mireles 19/11/2021 - 11:05 Chiều

McDonald’s is a real estate company not a burger company.

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Valeria Investment School 19/11/2021 - 11:05 Chiều

Great video by Baby Buffet 👏👏👏👏

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Allen Jolley 19/11/2021 - 11:05 Chiều

This guy is bogus. If his advice is to buy something and hold it, why isn’t he advising low fee index funds? Look up John Bogle, the founder of Vanguard and the advice he gives to his daughter. It’ll blow your mind. I’m a licensed financial professional, btw. These guys talk in code, but oftentimes it doesn’t SOUND like code. Snake oil salesman.

Reply
Daniel J R W Atlas Daniel Atlas 19/11/2021 - 11:05 Chiều

pleas arabic (cc)

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