📖Bill Ackman
Process-Oriented Investing
Good process outperforms lucky outcomes over time.
Focus on process, not outcomes. A good process can produce bad outcomes in the short run, but will generate superior results over time.
🏠 Everyday Analogy
📖 Core Interpretation
Bill Ackman sees markets as cyclical rather than linear. Understanding cycle position improves risk-taking decisions more than trying to call exact tops and bottoms.
💎 Key Insight：Process discipline is more reliable than chasing results.
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❓ Why It Matters
Ignoring cycles repeats the same mistakes: excessive optimism at peaks and excessive pessimism near troughs. Context matters for position sizing.
🎯 How to Practice
Monitor credit, valuation, earnings, and sentiment signals; reduce aggressiveness in euphoric phases and preserve flexibility in fearful phases.
⚠️ Common Pitfalls
Treating short rebounds as full cycle turns
Extrapolating peak conditions indefinitely
Becoming maximally defensive near valuation troughs
📚 Case Studies
1
Warren Buffett’s Dempster Mill Disaster (1962)
Buffett bought Dempster Mill, a windmill manufacturer, very cheaply, assuming mean reversion in earnings. Operations kept deteriorating; management was weak and the industry structurally challenged. The investment stagnated for years and consumed attention and capital before Buffett brought in new management and eventually liquidated/sold assets.
✨ Outcome：Buffett concluded that buying mediocre businesses just because they’re cheap is dangerous. He shifted toward “wonderful businesses at fair prices,” paving the way for Berkshire’s focus on quality franchises like See’s Candies and Coca‑Cola.
2
Long-Term Capital Management’s Near-Collapse (1998)
LTCM, led by John Meriwether with Nobel laureates, used heavy leverage to exploit tiny arbitrage spreads. In 1998, Russia’s default triggered a global flight to quality; LTCM’s positions moved violently against them. With leverage over 25–30x, losses spiraled, forcing a Fed-brokered Wall Street bailout.
✨ Outcome：The episode highlighted that historical models can fail in extreme conditions and that leverage amplifies small errors into existential threats. Many future hedge fund managers reduced gross and net leverage and improved stress testing and liquidity risk management.
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