I’ve noticed over the years that the word “tycoon” evokes a range of emotions and reactions.
Looking back, Jay Gould was a railroad tycoon before the term existed.
Railroads like the Missouri Pacific and Union Pacific became great companies under his leadership. Gould’s railroad empire was built using what we would consider hardball and unethical tactics, but it also united the nation and fueled America’s rise.
A very different and more establishment tycoon would be Amory Houghton, better known as Amos.
He enlisted in the Marines and then went to Harvard University, followed by an M.B.A. degree in 1952, and then joined Corning Glass Works becoming chief executive in 1964.
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Corning (GLW), founded by his great-great-grandfather in 1851, made Pyrex measuring cups and cookware and glass used for TV tubes, a business that accounted for 75% of the company’s sales. Then an influx of Japanese imports crushed this business, forcing Mr. Houghton to cut one-third of Corning’s workforce.
Corning rebounded after it pivoted to the development of fiber optics, betting that the hair-thin strands of glass would replace copper wire in data transmission. By 2000, optical fiber and related telecommunications products accounted for more than half of Corning’s operating profits.
Mr. Houghton was unpretentious, driving a Volkswagen and eating regularly at the company cafeteria, and after stepping down as CEO, Mr. Houghton served as a successful Republican Congressman.
Corning has continued to evolve, with 50,000 employees and major business segments in display technologies, optical communications, fiber optics hardware, environmental technologies, specialty materials, and life sciences businesses worldwide.
Modern-day new tycoons might include Nvidia’s Jensen Huang or Tesla’s Elon Musk, but there are many more, busy changing the world, risking capital, and building wealth.
What are the secrets of the new tycoons? And why does whatever they touch seem to prosper? In short, they think more independently, use the very best information, and then act boldly.
Tycoons know that the difference between perception and reality is an opportunity to make a killing.
Right off the bat, here is my take on ten profitable new tycoon realities:
10 Profitable “New Tycoon” Realities
1. The new billionaire tycoons grasp that wealth and capital, power and diplomacy are making a dramatic pivot to the Pacific Rim and emerging markets. Just as the 20th century was centered on the Atlantic, the 21st century belongs to the nations bordering the Pacific Ocean.
2. Where the West sees chaos, turbulence and poverty, the new tycoons sense emerging growth, profitable change and opportunity. They don’t need a think tank to tell them about the rise of the middle class in emerging markets - they see and profit from it every day.
3. While this economic pie of $6 trillion in new spending power is enormous, the new tycoons know that they need more than just investing in traditional blue chips like Procter & Gamble to capture this growth. They invest in the next blue chips with monopoly power to capture the biggest slice.
4. The new tycoons are real capitalists like the American tycoons of the early 20th century. But putting their own money on the line makes them more conservative than their bureaucratic descendants who manage Fortune 500 companies today.
5. They exploit and profit from the truth that emerging markets pivot sharply between euphoria and despair. For example, a young Argentine walked into the office of George Soros in 1990 and convinced him to invest $10 million in Argentine real estate. Several years later, this contrarian gambit became $190 million and eventually evolved into a fabulous $500 million real estate portfolio.
6. New tycoons look beyond the headlines that always mirror conventional wisdom. In fact, they love bad headlines because they scream opportunity and value.
7. New tycoon capitalists pay close attention to politics and diplomacy since they realize that shifts create opportunities, and most countries are a blend of free markets and state capitalism.
8. New tycoons are both street-smart and global – looking beyond their home country for opportunities worldwide.
9. These new tycoons build their fortunes by paying very careful attention to price – investing in high-potential opportunities only when they are “on sale.” This minimizes downside risk and maximizes upside potential.
10. Rather than just react, the new tycoons anticipate, thinking 3-4 steps ahead. This is the difference between being a king and a pawn.
Now, quite frankly, following the new tycoon blueprint is not for everyone. But if you need a dash of tycoon spirit in your portfolio, join the Cabot Explorer today!
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