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transcript15 - Financial Markets: Lecture 15 Transcript...

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Financial Markets: Lecture 15 Transcript March 24, 2008 << back Professor Robert Shiller: If we may begin. Today we have a very special lecture. I am very pleased to introduce Carl Icahn as our lecturer. Mr. Icahn has a career that is really relevant to some of the topics we have talked about in this course. One theme that we've talked about in this course is corporate democracy. We've talked about a book written by Berle and Means [Adolf A. Berle and Gardiner C. Means, Modern Corporation and Private Property, New York: Commerce Clearing House, 1932.] who said that shareholders are so dispersed that they have really no control over a company and boards of directors are self- perpetuating. Well Carl Icahn has made a career of really opposing that tendency in American business of self-perpetuating boards. Carl Icahn graduated from Princeton University, pre-med in 1957. In 1968, he founded Icahn and Company. This company, Icahn and Company, has taken substantial shareholder positions in a number of major corporations, including: RJR Nabisco, TWA, Texaco, Phillips Petroleum, Time Warner, Motorola. And when Icahn and Company takes a position in a company it then becomes active in the management of this company and in changing the way they do business. And they have done this with enormous success. So, Carl, I'm very pleased that you could come and do this today. Mr. Carl Icahn: Good to see you, Bob. Professor Robert Shiller: It would be really nice if you can give some clues to our students here, who many of them are themselves launching out on careers, of how you got started on this and what your philosophy is and what you would recommend to them. Mr. Carl Icahn: The career you're asking about--I went down to Wall Street back in--way back in the '60s and I thought I was really--I had gone to Princeton, a really good school. I had gotten in there from a tough high school; I was the first to go from my high school. Nobody believed I could do it--they never took an Ivy League--the Ivy League never took anybody from this school I went to. But anyway, I went; got in and left there and I thought I was a real smart guy. Cut it short--went down to Wall Street and worked with Jack Dreyfus and then I was playing the market in 1961. That shows how old I am. And in a bull market you make a great deal of money by doing leverage. It's a little bit like today with all the leverage that we had and now might be coming to fruition. I was borrowing money and bought all these convertibles and I thought I was a genius and Jack Dreyfus said, you're going to lose all your money. I had made a few bucks playing poker and that's how I started with about eight, ten thousand dollars and I made all this money by borrowing at 90%. I would go out and I was making a lot more in two weeks than my father made in two years. My father said, well you know, put the money away. I said, no Dad, I'm really going to make a fortune here. So, I went out--I remember once--and bought a Galaxy convertible. It was a beautiful car. I had a beautiful girlfriend; she was a model--it was just pretty
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This note was uploaded on 03/17/2012 for the course ECON 252 taught by Professor Robertshiller during the Spring '08 term at Yale.

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transcript15 - Financial Markets: Lecture 15 Transcript...

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