MOHNISH PABRAI 00:00
Actually my objective in writing the book [The Dhandho Investor] was to actually just crystalize some concepts in my own mind. And you know like they say, the best way to learn is to teach. And so actually I found that the process of writing the book actually helped me kind of, you know, kind of formalize the principles and such.
So it was a usual exercise for me, and I’m happy to see and I'm happy every year I get a nice check from Wiley and it's always fun to see that. And they recently came out with an edition in India, and I think that sold very well as well, so it's been vastly better than expected. So thank you.
JOHN MIHALJEVIC 00:57
The classic example that I think most know is the Patel story in the hospitality business as kind of an illustration of what Dhandho really means. If you would tell that one succinctly or if you prefer another illustration of what you really meant with this concept?
MOHNISH PABRAI 01:28
No, I think the Patel story is a great one because I think it illustrates the concept really well.
And in fact, in a number of conversations with Charlie Munger, he always brings that up and you know, kind of reminds people never to try to compete with the Patels in the motel business.
But basically, I think just taking a step back before we delve into the Patels is, you know, for me the kind of the starting point of interest in investing and value investing was a – really a quote by Warren Buffett where he said that, “I’m a better investor because I’m a businessman, and I’m a better businessman because I’m an investor.”
And actually the parts of your brain that get used whether you’re running a business or making portfolio decisions is the same parts of the brain, and the frameworks are very similar.
Unfortunately, I think what happened in the professional money management business is most professional managers have never run a business before. And I think that’s a pretty serious handicap because they’re missing a significant framework. But if you have an investment manager who’s had experience running one or more businesses, they have a significant leg-up versus their peers.
So basically – the book basically said, okay, so there is a lot of kind of cross-pollination between being an investor and being a businessman, and so I said why don’t we talk about some businesspeople, because the way they approach capital allocation and running a business just directly dovetails into how an investor ought to look at kind of their investment decisions.
Business and investing are relatable.
“I’m a better investor because I’m a businessman, and I’m a better businessman because I’m an investor.” ~Warren Buffett