Collection: Mohnish Pabrai - #102 'In Investing, You Don't Need To Know Everything about Everything'
Video Link: https://youtu.be/FYeYk9bWJSQ
In this episode, Mohnish Pabrai talks about why don't need to know everything about everything and we can say no to a lot of things in investing?
In this episode, you’ll learn:
Invest when the odds are in your favor.
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MOHNISH PABRAI 00:00
The good news about this business (equity investments) is that we don't need to know everything about everything and we can say no to a lot of things.
And so anytime you encounter something which is giving you trouble, you know, Warren Buffett has a real – you know, people have an inbox and outbox on their desks. On his desk, he got a real too hard pile box and it's actually a box which says too hard.
And one time I was visiting in his office and he was giving me a tour of his private office, and I saw that there's a real too hard box there, and it was empty.
And so I told Warren, I said "Warren, you always said that like 98% of the stuffs that shows up on your desk is in the too hard pile but the too hard pile is empty. So, what's going on?"
So he said "Oh, let me fix that right now, Mohnish." And he immediately took a whole bunch of paper and he dump it into the too hard pile. He said, "does it look like most of it is rejected now?" I said "yeah, it looks great now." He said, "okay, good." And then we took a picture with the filled up too hard pile box.
So bottom line is that we don't need to have an opinion or a position about everything. What we want to do is we want to have opinions on high probability of events, what we perceive as high probability events where we think that we got the odds in our favor.
So like for me, when some analysts say Fiat Chrysler is going to produce 3 billion in EBIT. And my man crush, Sergio (Marchionne) says we're going to produce 9 billion. I'll go with the man crush, you know, and so we just go with high probability bets.