Finding the right mentor is a requisite to become a successful investor.
To find that mentor, start by looking at the most successful investors. Just as important, find a mentor whose temperament and philosophy aligns with your own.
For me, that means a focus on earning income over the long term. I'm a patient investor and I want reliable streams of income. Simply put, my goal is to build wealth over time. I'm also a contrarian. When everyone is running from the fire, I generally run toward it.
All these characteristics are innate; they were with me from the get go. That means any mentor must share similar characteristics.
When I began my investing career many years go, one investor best fit my temperament and philosophy. That investor is Carl Icahn. Not surprisingly, his career was the one I watched most closely.
Icahn is certainly a success: Forbes estimates his net worth at $20 billion, placing him 26th on its list of the world's richest people.
Icahn's modus is certainly contrarian, seeking out undervalued and overlooked companies. The difference is that where I make contrarian purchases and wait for results (Warren Buffett frequently takes the same approach), Icahn actively agitates for results.
“Actively agitates” often means vocally advocating for share repurchases and dividends – a strategy I wholeheartedly endorse. And he has a long history of profitably “agitating” companies that dates back to the 1970s.
Over the years, he’s has parlayed success upon success to achieve multi-billion-dollar wealth. That tradition continues to this day. Let’s take a look at some of his most recent investments…
Icahn bought an 11.5% stake in Forest Labs (FRX) in May 2012, two months after its top drug, the antidepressant Lexapro, went off patent. He repurchased Chesapeake Energy (CHK) in May 2012 as natural gas prices crashed.
Last year, Icahn made a contrarian $320-million bet on Netflix (NFLX), reaping over $1.1 billion in profits in just 12 months. It’s worth mentioning that contrarian minds frequently think along the same lines. My colleague – Ian Wyatt – recommended shares of Netflix to his $100k Portfolio subscribers several months before Icahn bought up shares (read about that story by clicking here).
While Icahn’s investments are extremely interesting, perhaps the biggest opportunity is his own company. Icahn Enterprises LP (IEP) offers the opportunity for capital appreciation and pays a very generous 6.6% dividend.
Icahn Enterprises has far outperformed Berkshire and Leucadia National – two prominent benchmarks. Since 2000, Icahn Enterprises has delivered an astounding 1,085% total return. Compare this with gains of 208% for Berkshire and 325% for Leucadia, and the winner is clear.
Investing with an investor of Icahn's stature frequently requires a minimum hedge fund investment of $500,000. But for around $75, you can actually invest along the world's greatest contrarian investor by purchasing a share of Icahn Enterprises.
Over the years, I've developed my income investing style that is reflected the High Yield Wealth recommendations. But I still consider Icahn a worthy mentor, which is why I was recommended Icahn Enterprises to High Yield Wealth subscribers in July.
There is no such thing as a perfect investment strategy. But the combination of proven contrarian success and high yield in one investment like Icahn Enterprises is awfully hard to overlook.
High yield is important in today's market, as is the ability to increase that yield through consistent dividend growth – another characteristic of Icahn Enterprises. In fact, Icahn Enterprises just increased its distribution 25% in August.
Dividend-paying stocks are THE income investment of choice. Bonds, the traditional income investment, are simply too dangerous. I say that because I'm convinced we are at the end of a 30-year bond bubble that's about to burst. Interest rates are rising, and I expect them to continue to rise for years to come. That's bad news for bonds and other fixed-income investments.
At High Yield Wealth, we've just finished a special report titled The Bond Bubble Survival Guide. This is a must read for every income investors. In this report, we lay out the interest-rate scenario that's likely to unfold over the coming year. More important, we offer the best investments that enable you to build wealth and prosper as interest rates rise.
Best of all, this report is free to all High Yield Wealth subscribers. If you're not a subscriber, click here to take a closer look at this bond bubble survival guide. Of course, you'll also receive all the other valuable services High Yield Wealth offers.
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