No matter how bad things look, one can always rebound in life with the right attitude and lots of determination.
When Bill Ackman’s hedge fund was hemorrhaging money and he was splitting up with his wife of 25 years, he says the concept of compounding interest got him through. His candid reflection on navigating through simultaneous professional catastrophe and personal upheaval offers a masterclass in resilience that extends far beyond the world of finance.
“You’re down falling, what should you do each day? So the fund was down 30-something percent, the press, very negative press. There was some litigation in connection with that Valeant investment. And I was in the middle of a divorce, so it was bad. I was as about as bad as it gets, but I didn’t have a health issue,” Ackman said in an interview.
The period Ackman refers to represents one of the most challenging chapters in modern hedge fund history. Ackman had already admitted to losing more than $3 billion of his almost $4 billion initial investment in Valeant as its stock price sank 93%. The Valeant Pharmaceuticals debacle wasn’t just a financial disaster—it triggered a cascade of problems that threatened to destroy everything he had built over decades.
“So one support and key perspective, but the way you manage through that kind of stressful situation, all of us are gonna have a moment like this. Unfortunately, it’s gonna be a health issue. It’s gonna be you’re fired from your job, your startup fails, and it’s even harder when you’ve fallen from a high place to a low place.”
His acknowledgment that everyone faces such moments speaks to the universal nature of crisis and failure. For Ackman, the fall was particularly steep—from being named one of the world’s top 20 hedge fund managers after Pershing Square delivered $4.5 billion in net gains for investors in 2014 to watching his empire crumble amid massive losses and personal turmoil.
“It’s my method. Was just, you know what? I’m gonna make a little progress every day. Compounding is a solution to the vast majority of progress in the world, and personal compounding is even more powerful because you make 0.1% progress every day. It doesn’t sound like a lot, but annualized, it’s a huge amount.”
This philosophy of incremental progress became Ackman’s lifeline during his darkest period. Rather than being overwhelmed by the magnitude of his losses or attempting dramatic reversals, he focused on the mathematical power of small, consistent improvements.
“And so what I said to myself going through this period is, each day I’m gonna make progress. I’m not gonna look back to where I was because if I look there, I’m gonna get discouraged. I’m just gonna focus on the next step and then the next step and the next step. And you don’t notice any meaningful change for the first few weeks.”
“But about 90 days in, you’re like, okay, I’m here. Here’s where I was now. I used to be up there, but I’m just gonna keep compounding. And the curves of compounding, which I’m sure you know, well start like this, they don’t look like much, but then they sort of eventually kind of take off.”
Ackman’s approach proved prophetic. Pershing Square netted a 70.2% return last year, after adding 58.1% in 2019, demonstrating the remarkable turnaround he achieved. His philosophy of daily incremental progress, borrowed from the financial concept of compounding returns, reveals a profound understanding of how sustainable recovery works—not through dramatic gestures, but through consistent, patient effort that builds momentum over time. This mindset has become increasingly relevant in today’s volatile business environment, where leaders across industries face unprecedented challenges that require not just strategic thinking, but psychological resilience to weather extended periods of uncertainty and rebuild from seemingly insurmountable setbacks.