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Collection: Mohnish Pabrai - #107 '3 Reasons Why Buffett & Munger Are So Successful?'


Video Link: https://youtu.be/P55NU7f49xA


In this episode, Mohnish Pabrai talks about the three reasons why Warren Buffett and Charlie Munger are so successful?


In this episode, you’ll learn:

  • 3 reasons why Warren Buffett and Charlie Munger are so successful?

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[Transcript]

(Source: https://youtu.be/jfxOvdiac94)

MOHNISH PABRAI 00:00

So, most of the materials that I am going to present is plagiarised because I have no original ideas. You will soon learn that. And so, I am actually going to be channelling a guy name Peter Kaufman and another guy named Charlie Munger, a little bit of Warren Buffett thrown in.


So, Peter is the author of Poor Charlie's Almanack, some of you might be familiar with that, and it is a wonderful book. I think it's one of my favourite books. And he is very close friends with Charlie Munger and I think one time he told Charlie Munger that you know, "Charlie, you and Warren has been successful for three reasons. And, do you know what those 3 reasons are?”


And Charlie told him, “No, Peter, why don’t you enlighten me?”


And so Peter said, well, the 3 reasons you guys have been so successful is that, first, you're willing to be extremely patient. You guys are not in a hurry to do any things, you are willing to be very patient.


The second is that you’re willing to be very decisive. So when opportunity presents itself, you don’t hesitate to act. And Munger has refer to this kind of like a man with a spear, standing there waiting for a salmon to go by. And so he got this spear ready and he is perfectly happy waiting there for hours, and then you know, a big juicy salmon goes by and he spears it. So, you know, extreme patience coupled with extreme decisiveness.


And the third trait is having no concerns about being different from the crowd. So, you know doing whatever they feel makes sense regardless of how the world looks at it. So they don't really care about, you know, the – what people might say if they do something.


So and what Peter said is that – you really have to kind of unpack that a little bit. So when he says being patient is not about being in agony while being patient, it's being in bliss while being patient. So it should be a very natural trait for you to be very happy to watch paint dry. So if you're the kind of person who loves to watch paint dry, then the investing business is a very good one for you.


The decisiveness again, you know, it shouldn't make you break out in sweats but when you see every so often – you know, Charlie says that for each of us, the opportunities that would truly make us wealthy are not going to come around every week, they will come around every so often and they will come around at unpredictable times, but when they do come around and when you do recognize it, you need to act very significantly and very quickly.


And that again, it's a second thing that a lot of people have issues with where they'll recognize something and then they'll make a 2% bet. So, that also is a second trait.


And then the third one about being different, this is probably the hardest one for humans. You know, humans are adverse to stepping away from the crowd. And so having no concerns about how people think about you based on what actions you take is a very important trait. And having no stress about it.


So, each of you can kind of evaluate that for yourself in terms of whether those are, you know, does the glove fit, if you will. Will the glove fit with those traits? To some extent, I think they must be – at least, most of it needs to be inborn. I think it will be little bit difficult to take a high-speed trader and convert him into a model like that. So you need to have kind of a natural biased towards that in your personality.

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