MOHNISH PABRAI 00:07
It's a good question, actually when you're looking at commodity businesses that – I think you have to understand cost curves. You have to understand where they are on the cost curves.
You have to have some understanding of – kind of what are normalize commodity prices and some commodity prices on the different scenarios. So I think you have to understand those facets of macro.
But you don't need to understand the whole lot beyond that. I mean, I think that you know in my investment in ZINC for example, I understand cost curves well and I have some understanding of what drives zinc price and such.
But I don't have a very good understanding of that. So I think that there is a decent chance in the next few years that we might get significant movement upward in zinc prices. But thesis doesn't rest on it.
You know, if that happens we will make out quite well, but I think our investment probably works out even if that doesn't. And so that was fine, the more you're depending on a rise in prices, the better your understanding used to be on why that is absolutely assure to have it.
Before investing in a commodity-based business, you need to know:
1. The cost curves ; where are they on?
2. What are the normalize commodity price
3. Learn about different scenarios that might affect the commodity prices