MOHNISH PABRAI 00:08
Yeah, I think that's a good question.
You know, I think that I had exit interview everyone who was at that lunch, after the lunch, we didn't have any recording devices and none of us took any notes by the way on the lunch. And I want to capture as much profit as I could and I made some notes, after talking to everyone.
We actually covered about 54 different topics, wide range of topics over 3 hours. And you know, with Warren there isn't much that's not in the public domain and I don't think he told us much that we couldn't have found somewhere else.
But what the lunch did for me, it helped me calibrate and understand better what is really important to him and this kind of way he thinks about it.
And a few things that kinda stood out is – one is, you know, this discussion that we had with him about the inner scorecard versus outer scorecard and even he mentioned on the lunch that it wasn't out there, it was about to release in Alice Schroeder's biography. So if you read her biography, you can a bit of a write-up on that front.
And you know – he said, you know, would you like to be the greatest lover in the world but known as the worst or the worst lover in the world known as the greatest and he said if you know how to answer that question – what it means – what became clear is that, you know, Warren clearly marches through his own drummer.
And to a very large extent, he does not care what the world thinks. And so he is very willing to take a stand which is unconventional, which is even unpopular and he doesn't really care about the impacts.
And you know just one example would be, you know, the way – you know, he's a [Inaudible] but he has a wife and a mistress for decades. And you know, he is the public guy and it's an irrelevant data point for him as what people would think of it or make of it. So that's a person who's inner scorecard.
And I think in investing, that's very important because you want to have independent of thought. So typically, when you're making investments they will tend to be – as a value investor, they tend to be cheap and usually, they tend to be cheap for a particular reason. And that reason is probably believed by lot of people and so you're in effect taking a contrarian view and so you need to have conviction in those.
So that was one thing and the second is that when we talked to him about – You know, I asked him a question about Rick Geurin because on that time, I haven't heard about Rick Geurin in several decades after the seventies.
And I knew that he, Buffett and – Warren and Rick were close and there was only the two of them who were partners. So I just asked Warren, "hey, what happened to Rick Geurin?" And you know, he converted almost any questions into a learning opportunity.
And so he – the way he answered the question was that he explained how Rick was levered going into the big downturn in stock prices in 1973-1974. And you know, because he was lever, he got margin call and such. And he got squeezed and he actually was forced to sell his Blue Stamp and Berkshire shares to like Sequoia Fund and Buffett, and the price at that time which was nothing. I think he sold Berkshire stock at $40 a share or something like that.
And you know, then Warren went one step further, he said that you know, Charlie and I always knew that we were going to get very rich, but we weren't in a hurry and Rick was in a hurry.
And then, you know, he went even one step further he said that if you're even slightly above average investor and you spend less than you earn, you cannot help but get wealthy for a lifetime.
And you can clearly see that this is front-and-center, very important to Warren. So Warren is not interested in swinging two fences on the investing side, he wants to make sure the downside is well protected. He definitely does not want to use a lot of debt and such.
And we know that about those things about Warren on the public domain. But it sear it in for me that, you know, he could have run Berkshire in a manner that would have ended with the stock price even 2 or 3 times where it is today. But that doesn't mean one thing for him, the one thing for him is to – you know, to finish first you have to first finish.
And so he took the patient steady route and that's a very important lesson for investors is to take a very patient and steady route.
And I just wanted to – you know, highlight that in the context with something I read recently. And Arvind might know this, but Fidelity recently did a study of which brokerage accounts at Fidelity perform the best?
And maybe Arvind has more color of it, but you know, they studied all the different brokerage accounts. And there were these two people who were talking about – James [Inaudible] and another guy, and the other guy was joking, yeah, it was the people who were dead whose account performed the best.
And then James [Inaudible] said "no that's close, it was the people who has forgotten that they had account in Fidelity." So when they looked at the performance of these different brokerage accounts that have stocks in them.
The one that performed the best were the one that had absolutely no activity for a very long period of time. Which mean, you know, there were people that picked a few stocks and then these guys just forgot they even had an account.
And in the end, those accounts performed the best that just shows you how much – how good brain power does for you in investing.
And so there's a tremendous lesson in what Buffett is saying, a tremendous lesson in that Fidelity study. So the number one skill that you can bring to bear in investing is patience, extreme patience.
And you know, even if you go back and look at stocks you bought 5 years ago or 10 years ago or you may have sold them, you know, you just look how they have done and many of them would have done vastly better than you would have thought.
And they will probably done well when you sold them. So those are some of the – that stand out.
What is your scorecard? Inner or Outer?