In this episode, Preston and Stig talk to one of the most respected investors implementing the Buffett-Graham approach.  Mohnish Pabrai has been running his Pabrai Funds since 2000 and since that time his fund has produced triple digit returns.

Mohnish has become quite famous in the investment world because he attributes his success to being a cloner of Warren Buffett and Charlie Munger.  In an effort to achieve similar results to Berkshire Hathaway, Mohnish has dedicated his professional life to understanding the more obscure elements to their success.  He has modeled his Pabrai Funds after the same company structure that Buffett used when he ran Buffett Partnership Ltd.

In this episode, you’ll learn:

  • How Mohnish accumulated business knowledge from the age of 11
  • Why Mohnish is one of the very best and respected investors in the value investing community
  • What special advantages people like Bill Gates and Warren Buffett had to become so successful
  • How Mohnish set up and ran a business like Warren Buffett and Charlie Munger
  • Why investing is not a team sport

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BOOKS AND RESOURCES

Mohnish’s new website: Chai with Pabrai

Mohnish’s Book, The Dhandho Investor – Read Reviews for this book

Mohnish’s Youtube Channel

Mohnish’s Twitter

VIDEOS THAT SUPPORT THIS PODCAST

MOST POPULAR PODCAST EPISODES

2018-04-18T10:49:41+00:00

14 Comments

  1. Jay Gupchup
    Jay Gupchup January 8, 2017 at 9:23 pm - Reply

    Great episode as always. I really enjoyed the depth of the conversation and appreciate Mohnish sharing many of this thoughts and experiences. I particularly liked the part where he talked about Charlie and Warren’s approach to minimize their error rate as a way of obtaining good results – I’ve heard Jeff bezos also repeatedly talk about using ‘regret minimization’ as a mental model for how he goes about making decisions. Another area where I have personally observed this is when I play poker with players who get consistent results – they are not typically the ones that make the riskiest or bravest moves, but ones who have a strong focus on reducing their error rate and go optimize on that – so much of that seems to hold true in investing too. Fantastic episode and thanks for making this happen :).

    • Stig
      Stig January 11, 2017 at 8:06 am - Reply

      Thank you for the kind words Jay! We can’t wait to release the second part interview with Mohnish!

      -Stig

  2. Pablo DN
    Pablo DN January 10, 2017 at 12:25 am - Reply

    Hi! On episode 120, Mohnish Prabai mentions a book he used as a reference for setting up his first partnerships (close to minute 18). I couldn’t tell from the audio the name of the authors and I was interested in taking a look at it. Would you be so kind of posting the name and title of that book? Rgds. PD

    • Ivan Kuznetsov
      Ivan Kuznetsov January 11, 2017 at 7:14 pm - Reply

      That would also be my kind request. Thank you!

    • Shell
      Shell February 11, 2017 at 3:46 am - Reply

      Buffett: The Making of an American Capitalist (Book by Roger Lowenstein). You might know by now. Would be useful for other readers.

  3. RajLui
    RajLui January 12, 2017 at 4:13 am - Reply

    Pablo DN, Mohnish was refering a book by Roger Lowenstein but he didn’t mention the name of the book.

  4. Wei Kong
    Wei Kong January 12, 2017 at 6:25 am - Reply

    Would be great if full transcript is available (talk on brain optimize level at teen years). Thanks for this wonderful episode

  5. Steve
    Steve January 12, 2017 at 11:35 pm - Reply

    Hi all, I have followed up with you both -Stig and Preston since the very beginning its been an interesting transition. I particularly love the introduction on value investing and have seen how the both of you take on different approaches to defining what value investing means to both of you.

    Stig I hope you kept long with those oil companies seeing that the long run did prove to be an insidious climb to normal $50 dollars a barrel now.

    I must say that listening to both of you has taught me one main thing..knowing what will happen is easier than knowing when it will happen.( even the what part can be tricky as to the specifics)

    I have accepted the “when” as the postulated similarity to complexity theory. Who knows which snow flake will make what mountain avalanche occur? Similarly with the rally since president elect came on till now. I saw my self knowing a sell-off would occur but waiting for the “when” to happen. I shorted some stocks in the bond market – Preston which equated me to be a speculator..then i sold out of it realizing my errors. I wasn’t thinking about opportunity cost. I then jumped onto the bandwagon of the New Case for Gold which did occur and is occuring still, but did ton of research from qualitative to quantitative, but only found myself forgetting that I had unknowingly moved away from the primary principle of value investing (only invest in business that you feel are good – reputable Guy Spier types. Well cause you are an owner, cause Warren Buffet kept beating that in our heads Value the Moat and Management quality not just numbers.) You might of guessed it I went into gold mine investing so the multiples would be better since you knew gold would go up.

    So does being a contrarian mean going in at the lowest possible tick when people are running away like Munger did with bank stock WFC. Meaning attach where the fear is the greatest? Cause if the Tech bubble burst AMD would be a possible candidate depending on price, or would you stick with companies that have the Moat, Management, and Growth potential we expect that is irrationally valued?

    Just thinking out loud,

    Thank you for your contributions to investing you all make a difference and have changed the way I invest in a good way. Please send out the Bershire instructions on how to sit in at the Omaha shareholder meeting!

    Thanks,

    Steve

    • Stig
      Stig January 13, 2017 at 2:41 am - Reply

      Steve,

      Thank you for your kind note.

      Yes – I decided to hold on to the oil stocks as said on the podcast and so far I have been very satisfied with that decision. I’m considering how long I should hold on now that energy is trading at a Schiller P/E of 18.5. I still feel that there is more to gain in the oil price and in oil stocks, but I also do not want to speculate…very interesting times…

      -Stig

  6. Steve Fung
    Steve Fung January 13, 2017 at 4:54 am - Reply

    Hey Stig, i was just wondering. How much of you is Ben Graham and how much Phil Fisher?

    • Stig
      Stig January 13, 2017 at 9:07 am - Reply

      Good question. I would say I’m 70% Graham and 30%.

      How about you?

      -Stig

  7. Steve Fung
    Steve Fung January 13, 2017 at 6:07 pm - Reply

    Hey Stig, 60% and 40 % Graham (60% unlabelled because I am some hybrid of Munger, Daniel Kahneman, Fisher)

    It’s truly an honor to be able to have comment exchanges with you like this, and grateful for the time you invested in doing so.

    The reason I posed this question to you is my inability to shake off a comment by Albert Einstein “What counts can’t always be counted; what can be counted doesn’t always count.” I understand sentences and quotes can be mangled and misused in different context but this does impart a lot of wisdom.

    Even if you stay in your circle of competence, there is also one additional preponderance, which order do you precede with in utilizing this (Graham to Fisher) percentage distribution? stock screening approach then look into qualitative to justify your choice; or qualitative then dive into stock screening ratios. This order matters because of “exposure effect” and “congruence bias.” Then finally, the bad habit of Wall street “confirmatory bias.” —regression to the mean is a constant battle and also what is fun about investing.

    One of my top Mungers approaches, Put the inverse in approach a problem.

    Stig, thank you again for the time I will keep you updated with the turnouts of my own investments.

    Thank you Stig its been a pleasure!

  8. Redeye
    Redeye January 14, 2017 at 9:32 am - Reply

    Is there a way to download the podcast? thanks,

  9. Jason Palmer
    Jason Palmer January 17, 2017 at 4:03 pm - Reply

    Lets give this guy our money to manage.

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