Collection: Mohnish Pabrai - #80 'In Investing, All Knowledge Is Cumulative'


Video Link: https://youtu.be/2JMP5BIVflk


In this episode, Mohnish Pabrai was asked how has the way he invest change between 1999 and 2015?


In this episode, you’ll learn:

  • The good thing about investing versus sports.

  • How do we build up knowledge about investing into our brains?

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

[Transcript]

(Source: https://youtu.be/7F2IGzES7Uc)

MOHNISH PABRAI 00:00

Let me just to make sure I got the question correctly. I guess the question was that how has the way I invest change between 1999 and now? Is that correct, Arvind?


Okay, alright. Yeah, so you know one of the things about – good things about investing is we are in a different place than Kobe Bryant. And you know our beloved Kobe has hung up his boots now and you know, did you like his poem? I like his poem.


And you know, Kobe said my heart wants to play, my soul wants to play and my body just not there. And the good news in investing is, you know, we only need this portion of the body to work.


In fact, one can argue we probably only need this portion, maybe even just this portion to work. And that's all we need, we just need like this much. We don't need any hands or legs or anything else.


And so, you know, I'm sorry to say but Kobe may have pick the wrong vocation. You know, because he need the whole body to function and we don't need the whole body, we just need a tiny tiny – I say I probably need like about, maybe I said 2% of my body weight. If I had about 2% of my body weight, I think we could function just fine. And so the good news is that until that 2% is functioning well, we can keep doing what we're doing.


And the other good thing is that unlike Kobe who may have peaked a few years back, the good news is that I haven't peaked yet, you know? And my best investing days I think are ahead of me. What a wonderful concept.


And so, you know, the beautiful thing about investing is all knowledge is cumulative. You know, so you sit down for lunch with Charlie and he beat you over the head with a two-by-four about buying Sears. And yeah, it hurts at that time but then you get a little bit better about the next time you see one of those. And you're that much faster at saying no to that. And so, you know, you start seeing more thing.


So I would say that one of the best things about investing is that you all start out with this brain which has horsepower but doesn't have any content. You start out with horsepower with no content right?


And what Warren and Charlie have been doing is, they have been dumping content into that brain at a very intense rate. And even if we don't do it at the rate they have done it with, as long as you keep pumping content in and synthesizing that content.


And you know, last [Inaudible] of mental models, you going to keep getting better and better over time with how you look at the world. So the best thing you can do is never stop learning, always keep reading, turn off the iPhones and focus on just dumping as much stuff into your brain.


And ideally dump it into your brain from either – you know, Munger says that you know, publication like Forbes, Fortune, Businessweek, Economist have encapsulated a lot of stuff in a few pages. So that is concentrated input into your brain. So you know, read all of those, read the New York Times, read the Wall Street Journal, the Financial Times put all those in it.


And then look for great authors because they spent, you know, 2 years or 3 years writing a book and that's fine you can put all that content in your brain in a week. You know, so the idea is to keep pumping content in, the idea is to keep learning from other people's mistake that's even cheaper than your own. But of course, even if you make your own mistake then those get seared in more.


So over time what is going to happen is you are going to keep getting better because you know more and you seen more and you understood more. And you know, Munger says about Buffett that he is still learning and he's still getting better.


And so I would assumed that the difference between the 1999 Mohnish and the 2015 Mohnish is; one is the 1999 Mohnish had more hair and you know, we have a little less hair now, that's okay. It's – haven't taken away from the critical 2% body weight so that's important.


And the 2015 Mohnish has taken several arrows in the back which have taught him a few lessons, which is great. And also, learned a lot from other people's mistakes.


You know, like I learned a lot from Valeant for example, right so I never made an investment in Valeant. But when Munger made those comments on Valeant and he compared them to ITT. I actually bought – because I didn't know much about that guy Harold Geneen and in fact, I had a book here.


Yeah, so I bought this biography on Geneen and it's called the Sovereign State of ITT. I mean this book was, I think written in the 60s or something, it's out of print but I think it would cost me like $0.99 on Amazon. So the price was right and thank you Mr.Bezos.


And so we – you know, I really enjoyed reading that because I read the ITT biography on Geneen and then I could understand kind of what is going on with Valeant and all of that. And you know that was like free entertainment from the cheap seats, so it was great.

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