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Collection: Mohnish Pabrai - #61 'Have Peers, Not Team'


Video Link: https://youtu.be/xWrIuuGsX3M


In this episode, Mohnish Pabrai talks about why do you need peers but not a team in investing and he also shared the lesson from Charlie Munger of having someone else to talk to on your investment ideas.


In this episode, you’ll learn:

  • Why is it important to have someone else to talk to on your investment ideas?

  • How Mohnish Pabrai & Guy Spier run their fund?

To check out all Collection: Mohnish Pabrai <click here>

[Transcript]

(Source: https://youtu.be/oC_xjoUo89E)

MOHNISH PABRAI 00:00

You know, I had a conversation a few years back with Charlie Munger. And he mentioned that – he just casually mentioned that he always had someone to talk to about investments. So I said "Oh you mean, like Mr.Buffett?"


He said "Well, it wasn't always Warren but I always had someone to talk to." And in fact, recently he said that – I think at the Daily Journal meeting he said that even Einstein needed someone to talk to him.


And so I think that there is a – You know, each human brain processes the same information differently. And to the extent that you can find someone who's thoughtful and it's not processing data similar to you, it would be useful to have those conversations.


But I think that is different from having a team. So if you have, let's say analysts under you and they report to you. Then the incentive and the dynamics of that exchange, they are very different from having a peer where there is no [Inaudible] interest of any kind and two people having conversations about [Inaudible].


So I never appreciated it, you know, I think for most of the history of Pabrai Fund that I operated, making decision on my own.


And I have a good friend Guy Spier, and usually he and I will talk about things that he's looking at or I'm looking at. And many times we don't agree. Many times I will buy things that he won't buy or he will buy things that I don't buy and so on. So if you look at our portfolios, they look very different from each other.


But I found it very useful to have this conversation because actually, Guy run his fund on his own, either of us have any economic interest in the other, we don't gain or loss anything on what happens.


And I'm confident that and he's confident that we are candid in sharing our beliefs and perspectives, and that's useful. So I think that it is valuable to have that type of relationship. And it doesn't need to be, even be an off the charts person. I think just having someone else –


One of the things that happened just this year actually in Omaha is, I was at this brunch and Charlie Munger was there. And he was sitting there and there was nobody next to him so I decided to help the guy out and give him some accompany. And just so he doesn't get bored. And I took Guy with me.


And I said "Charlie, this is the person I talked to about my investments." And Charlie eventually got very interested in, you know, he is kind of checking Guy out.


And then Guy says to him that, "you know, I don't know why Mohnish cares to talk to me because I really have nothing to add to anything he comes up with."


And so Charlie said that "Well, the process of going through – going through process of talking to someone else about your ideas, requires you to put them together in a certain kind of format and manner that can be articulated to that person. And that process is useful in seeing some faults in your argument."


And so then Guy said to Charlie that "Yeah, you know Mohnish could actually just do that with the monkey." (Laughter) "You know, he can just articulate –" So Guy – Anyways, Charlie quickly said "Yes, but the problem is Mohnish would know it's a monkey. (Laughter) And so it wouldn't work."


You know, so Charlie actually I saw in that interaction that and I have seen even when I talked to him is that he puts a huge amount of weight on that notion of having another person to bounds it off.


And so I actually don't, I don't moved on anything now and I haven't moved from anything until I have that at least one conversation and from that further we have any conversations.


And you know, like I say we might not agree but you know, it's exactly what Charlie says it forces me to kind of put my thoughts in an organized manner, and hear some perspective may be different than such.


So it's a huge advantage to go. But I think you have to set up in a manner where there is no [Inaudible] interest, there is no [Inaudible], it's a trusted open relationship and that works, you know.

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