Investment Wisdom: Lessons from Mohnish Pabrai w/ Shawn O’Malley (MI382)
Summary
Core Principle: Emphasis on circling the wagons—holding a few exceptional winners over decades to drive outsized compounding despite many mediocre positions.
Case Studies: Positive long-term holding examples include AMZN, BRK.B, WMT, and the transformative stake in NPN.JO via 0700.HK, underscoring the power of not trimming winners.
Sunteck Realty: Pitched as a high-upside play in Mumbai’s redevelopment; SUNTECK is backed by capable capital allocators and India’s structural urbanization tailwinds.
India Theme: Bullish view on India and Mumbai Redevelopment as multi-decade catalysts, especially for Real Estate Development companies.
NVIDIA Example: NVDA highlighted as a modern big winner where selling early proved costly, reinforcing the hold-winners mindset.
Valuation Discipline: Great businesses aren’t always great investments at any price; mega-caps like MasterCard can face size/valuation headwinds versus smaller underfollowed names.
Concentration: Willingness to let winners become large portions of the portfolio, mirroring examples from Berkshire and Naspers-Tencent.
Risk Management: Prefer simple, asymmetric bets with low downside/high uncertainty, avoiding overpriced assets, complex trades, or unnecessary activity.
Transcript
(00:00) great companies especially if they reach a certain size are not necessarily great Investments and more average companies with undervalued shares or a large runway for growth can in fact be great Investments I'd add to this to say that market prices for stocks are fundamentally about expectations since companies are valued based on the earnings they will create in the future the challenge with investing in large well-known great businesses is that expectations are going to be high great companies have high expectations for (00:27) their performance but if you can find a company that the market thinks is just good but actually has hidden modes that make it a great business like prde thinks is the case with suntech then you can benefit from not only owning a company that can compound returns at high rates but you'll also have the Tailwind of the price earnings ratio rising in your favor as the market eventually realizes how good the company is hello before we dive into the video be sure to click that subscribe button so you never miss an episode show us (00:58) some love by giving a thumbs up and Shar sharing your thoughts in the comments your support really means everything to us today I'll be digging into the wisdom of Manish PAB a billionaire investor with a market beating track record spending some 25 years I'll pull from a variety of sources to distill down the most essential lessons to be learned from PAB true to paba's own teachings on the value of cloning habits and tactics of great investors I'll be looking to shamelessly clone in myself cloning is such a powerful concept because it leans (01:27) into following the path blazed before us by winning investors rather than trying to reinvent the wheel studying what has worked and avoiding what hasn't worked for the best investors across their careers is almost like a cheat code in a way allowing new investors to quickly level up their game while saving them lots of time and pain from learning these lessons through their own experience the hard way the challenge is in actually being able to internalize these lessons without having to learn them the hard way monish is a master of (01:53) cloning both Warren Buffett and Charlie Munger taking what has worked for them and trying to apply it to his own life and investing strategy over the years PAB got to know Buffett after spending $650,000 to have a charity lunch with him which he later said was worth every penny he actually felt the two and a half hour meal with Buffett was under price given what he got out of it and from there he became even closer with Charlie Munger before he passed on Fridays they would play bridge together which was munger's favorite game PAB has (02:21) truly had a rare chance to study the best investors to ever live up close and personal and that has surely rubbed off on him but I want to clone the master cloner and soak up as much knowledge from him as possible having said that let's begin with p's 2023 presentation during Burkshire weekend where he gave an hourlong talk at the University of Nebraska which became an instant hit throughout value investing circles one simple metaphor dominates the talk that is circling the wagons if you ever watch the TV series Yellowstone you might know (02:52) the reference imagine yourself as a 19th century Pioneer trailblazing across the wild west a world with unknown threats lurking around every corner where something as trivial as getting the wheels of your stage coach stuck in the mud could be life or death circling the wagons then is a defensive maneuver it's a last Stitch effort to make a stand and fend off attacks from Native American tribes on this new frontier cautious thinking and deliberate action are critical there was very little room for error and any catastrophically wrong (03:21) decision could Mark the end of your journey investing is less dire but it's similar in that you're operating in an uncertain Arena where you can never take safety for granted and a single big mistake can be both easy to make and devastating yet as PAB points out while investors make so many decisions across their careers only a small handful of them about 4% end up being of any lasting consequence as Warren Buffett writes in his 2022 letter to birkar shareholders quote over the years I have made many mistakes (03:53) consequently our extensive collection of businesses currently consists of few Enterprises that have truly extraordinary economics many that enjoy very good economic characteristics and a large group that are marginal let me go ahead and say that again Warren Buffett believes bur shire's vast Investment Portfolio has a cohort of companies that are just marginal at best that isn't modesty or self- effacement it's just economic reality over a lifetime a few Big Winners and key decisions end up making all the difference as P breaks it (04:23) down over six decades Buffett has made 300 plus important decisions as Burkshire CEO including 80 plus business acquisition over 200 common stock Investments and 10 plus Key Personnel hires yet Buffett says the following in 58 years of burk share management most of my Capital allocation decisions have been no better than so so our satisfactory results have been the product of about a dozen truly good decisions some of these truly great decisions stem from investments in companies like Geico Coca-Cola American (04:53) Express apple and National Indemnity as well as in people like a Jane who runs berkshire's Insurance operations P explains that with these truly great and impactful decisions it wasn't the initial choice to buy that mattered most it was the decision to continue holding those Investments by luck or skill anyone can recognize attractive businesses to own one of the differentiating factors for investors like PAB and Buffett is not to lose sight of what matters most though as in many people have made these same investment decisions along the way but (05:25) few have held them as long as birkshire and reaped the full benefits of the decision to invest in companies with lasting competitive advantages across more than 300 important decisions Brar kept plenty of poor and mediocre businesses but they also held onto their biggest winners too which more than made up for the average performance from the rest of the portfolio the metaphor of P makes is to say that investing is a very forgiving business so long as you don't cut the flowers and water the weeds too many people make the mistake of doing (05:54) all the work to understand and identify a great business and then after a few years despite no real change in the the business they decide to sell maybe they feel as though they already earned a decent profit that they want to lock in or maybe they simply get bored and are looking for Action whatever it is they rebalance over time away from their biggest winners and correspondingly their best decisions hence cutting the flowers while watering the weeds by making just a handful of great decisions across almost six decades and holding on (06:22) to those winners berkshire's compounded returns at 20% per year trouncing the S&P 500's 9.9% annual returns from 196 5 through 2022 that difference in compounding of 10 percentage points a year over that full time period results in almost 3.8 million per of cumulative gains versus 24,000 per of cumulative gains for the broader market so a dozen or so great bets over a very long period of time drove a difference of over 3 million per of cumulative returns to go back to the circling the wagons metaphor these big winners for birkshire and any (06:56) long-term investors portfolio make up the stage coaches that defend the rest to the portfolio a few excellent investments will defend your portfolio from recessions stock market panics and whatever other risks await you in this uncertain world to really make the point PAB uses the South African publishing company naspers as an example back in 2001 naspers purchased a 46. (07:18) 5% stake in the Chinese company ensent for only $32 million while naspers itself was a $500 million company after ent's IPO in 2004 that stake in ensent was deluded down to just 36% but over the next 14 years nasper didn't sell a single share of tensent while tensent stock grew at 50% per year with that incredible growth by 2018 tinson was a $530 billion company and nasra own shares in it worth some1 170 billion in less than two decades tinent went from representing about 6% of nasar's market value to more than 100% of it since (07:54) NASA's own Market valuation was actually less than the value of its stake in t Cent what made the difference for NASA was not just their decision to invest in tensent but their decision to continue holding it you can easily see how after a decade of 50% plus returns per year from ensent elevating nasar's market value from the hundreds of millions to the hundreds of billions they might have wanted to take some money off the table and trim their position in ensent instead nasper circled the wagons around ensent and that is what has generated (08:21) some of their incredible incredible returns over that period another great example of not cutting the flowers and watering the weeds or circling the wagons to use both met fors comes from investor Nick sleep between 2001 and 2013 Nick sleep's Nomad fund earned returns of 18.4% per year almost triple what the msci world stock index earned over that same period with $3 billion in assets under management sleep dissolved the fund in 2014 yet his simple recommendation to his investors was to Simply continue holding Amazon Costco (08:51) and birkshire for the next 10 years and equal concentration his investors could effectively recreate the portfolio without the fees so long as they had these same conviction to hold on to those companies for an extended period it may be of little surprise but many of the funds investors could not stomach doing that even at sleep's explicit advice and they Diversified to their own detriment sleep's concentrated portfolio despite paying off hugely was too much for many of his funds investors to swallow while Costco and birkshire have (09:19) been great bets Amazon was the key investment to circle the wagons around and continue holding even if everything else in sleep's portfolio had gone to zero with a 20% stake in Amazon the portfolio would have outperformed the S&P 500 by six percentage points from 2004 through 2023 so the many mistakes they made along the way simply didn't matter that much when they were right in such a big way about buying and holding Amazon forever even with Ben Graham who was Warren Buffett's mentor and the father of value investing his best (09:47) investment ever was in Geico a high quality company that he held for more than a decade yet at least in part it stood at odds with the investment method he had preached of buying overly cheap stocks at a discount to their intrinsic value and then selling them within a few months or years once they reached their full value Geico was such a good investment to hold indefinitely that Graham violated some of his personal rules around portfolio sizing and invested 25% of his partnership's assets into the company despite normally having (10:14) a limit of investing no more than 5% in a single investment as Graham wrote decades ago quote ironically enough the aggregate of profits acre from this single investment decision far exceeded the sum of all the others realized through 20 years of wide ranging operations and specialized Fields involving much investigation endless pondering and countless individual decisions he adds quote one lucky break or one supremely shrew decision can we tell them apart this may count for more than a lifetime of journeyman efforts in (10:46) 25 years Geico was in the parlament of Peter Lynch a 500 bagger again I love how Ben Graham frames it it's not just a question of luck he says behind the luck or The crucial decision there must usually exist a background of preparation and discipline one needs to be sufficiently established and recognized so that these opportunities will knock at his particular door one must have the means the judgment and the courage to take advantage of them one big correct investment held for a long time can make or break a career in 1976 (11:20) Graham is recorded as saying that after having made an investment in Geico in 1948 from then on he and his Investment Partners seem to be brilliant people if Ram had sold Geico in 1950 as opposed to holding it for more than another two decades he would have short changed himself and may not be remembered with the same reverence as he is today which stems from both his wonderful teachings and his track record of success while long-term investing with concentrated bats on single great companies was not really at the core of Graham's (11:49) philosophy it worked out fantastically well for him with Geico and that is what in part inspired Buffett to acquired Geico and fool through birkshire and shift his perspective toward buying wonderful companies at fair prices over Fair companies at wonderful prices continuing on with pb's talk on circling the wagons he explains that in the 1960s and 1970s it became quite fashionable to invest in the 50 largest and best known US Stocks which was an approach known as a nifty50 where many thought that you would do well by purchasing these (12:19) companies regardless of the price while this episode of Market history was essentially a bubble that burned investors over a long enough time the strategy didn't work out as poorly as you might think it's controversial but if we include Walmart in the nifty50 that ends up being the stock to circle the wagons around with a portfolio of nifty50 stocks in 1970 and just a 2% stake in Walmart over the next 52 years even if every other company in your portfolio went bankrupt your small stake in Walmart alone would have been enough (12:49) to deliver a market beating average annual return of 133% per year for your entire portfolio's value obviously you would have done considerably better by just owning Walmart but even a small position that you hold on to in a company that becomes one of the biggest winners in markets is more than enough to redeem an otherwise failing portfolio the hardest part is holding on to Walmart for 50 years or holding on to Amazon and tensent for 20 years in the last century a small percentage of stocks have been such big Winners that (13:18) they drive the majority of the Market's returns While most others fail or underperform by investing in an index fund you're ensuring that you always have some exposure to these big Winners which will deliver You Average stock market returns but to really separate yourself as a stock investor to the extent that Buffett sleep and P have you need to correctly identify these companies that have the potential to be big Winners bet big on them and hold them indefinitely while knowing that many of them will not work out but the (13:46) few that do will fully make up for it even without Walmart The nifty50 Returned 10.2% per year between 1972 and 2023 yet almost no one would have held on to that portfolio of stocks for long enough to earn those returns because the nifty50 stocks like Disney McDonald's and Coca-Cola collectively lost half of their value in the bare Market of 1973 and 1974 even at ridiculously expensive valuations and a subsequent major bare Market holding on to the top 50 US companies would have worked out well for you it's just that few people could have (14:16) stomached that sort of volatility along the way without question I'm sure most nifty50 investors bailed on the strategy either in the 1973 to 74 bare Market or sometime not that long after P's key less are that firstly a very large error rate is par for the course with investing secondly don't cut the flowers to water the weeds hold on to great businesses for dear life and thirdly avoid paying ludicrous prices for great businesses when Brookshire bot Coca-Cola American Express and Geico they did so at modest valuations relative to their (14:49) business quality and that complemented the returns these businesses were able to compound over time additionally PAB invokes another great investor chck Acra and suggests we should Embraces three-legged stool approach to investing which entails focusing on buying great businesses run by great people with long runways for future growth he reminds us that when even great businesses appear fully priced or even significantly overpriced based on what we've gone over here today you would still not want to sell the stock of a big winnerless it (15:18) truly reaches a point of being very very clearly and egregiously overpriced relatedly a single great stock like Walmart or Amazon can grow over time to become more than 6 % 70% or even 99% of your portfolio but that concentration un itself is not necessarily a reason to trim the flowers Buffett has never trimmed his stake in birkar even though it is over 99% of his net worth it was the same with naspers and tensent where naspers went many years without trimming despite its tints and stake ballooning to consume its entire Market valuation (15:52) so Pai has taken this to heart and his portfolio at least as of 2023 is extremely concentrated with 70% and just three bets and one bet on a Turkish company called racist made up more than 40% of that pie he tells the audience that the risk is not in getting stuck holding companies like IBM or Intel that are supplanted by competition but in being too trigger happy to let go of the great companies in your portfolio for instance the opportunity costs of selling Nvidia in 2020 are just massive the company has added $3.3 trillion in (16:23) market value in 5 years up from a market cap of $144 billion I'm sure there are people who believed in Nvidia from 2015 through 2020 who sold the company during the pandemic crash never got back in and missed out on all that upside the gains from an Nvidia more than make up for the ibms and intels of your portfolio and that's the whole point for every big winner you can have a dozen mediocre companies and still do incredibly well over a multi-decade Time Horizon before we go any further in studying PB I want (16:53) to revisit the lunch he had with Buffett that I mentioned at the top of the show he actually did it jointly with another Fain value investor guy spear both of them walked away in awe of Buffett unsurprisingly and particularly in how he and Charlie Munger approached everything they did with honesty and integrity habri has said that the two use an internal yard stick to measure integrity and in doing so they would ask a rather unconventional question that is would you rather be the greatest lover in the world yet be known as the worst (17:24) or would you rather be the worst lover and known as the greatest Buffett reported ly told P that if you know how to answer that question correctly then you have the right internal yard stick this also plays into the old Buffett aism that you should never do anything in life if you would be ashamed of seeing it printed on the front page of your hometown newspaper for your friends and family to see another takeaway that PAB has cloned from Buffett is in getting comfortable saying no Buffett has relayed before that quote the (17:53) difference between successful people and really successful people is that really successful people say no to almost everything during their lunch PAB got to Peak at Buffett's planner and saw that it was almost completely bare as gu spear put it to scene DC Buffett likes to leave his time unstructured and to leave plenty of room for spontaneity it's very tempting to say yes to every meeting that your colleagues or business contacts propose but you'll end up filling your calendar with a bunch of events that at a minimum distract you (18:21) from working deeply that isn't to say Warren Buffett doesn't do anything all day he just doesn't formally schedule many things instead he leaves slate open so he can brainstorm read deeply or call people as he sees fit this is something that Bill Gates has actually validated too after meeting Buffett in 1991 he said that Buffett's calendar was largely empty having a packed calendar doesn't make you a more serious person the discipline to control and strictly value your time by saying no to lots of things is an important skill for PAB he told an (18:51) audience back in 2019 that he has over 400 investors in his fund globally but he can't remember the last time he a call or exchange emails with any of them he's defined the expectations and those relationships and also selected to work with investors who are like-minded so they don't feel like they have to call them up every quarter and ask what's going on in the portfolio there's just a level of trust there that makes it very easy to work together Buffett for his part tells Burkshire shareholders that once a year he will make himself fully (19:17) available to them and for the rest of that year he's working and not available and that one day is of course the Burkshire shareholder meeting where he sat on stage alongside Charlie for many decades and answered questions for six hours plus the way P thinks about it is that like Warren he wants to configure his work in a way such that he would be happy to do it even if it weren't his job if he had to answer a ton of calls and emails from anxious investors every day that would very much show like work and he (19:42) certainly wouldn't do it once reaching some independently wealthy status that he's already achieved so PAB has rolled his ethos into his personal life as he tries to live true to his inner score card in part this is about being highly selective about the people he allows into his life and being so selective PAB finds comfort and knowing there are billions of people on the planet so the opportunity cost of missing out on a great personal connection is pretty low because he always had the chance to meet new potentially great people but the (20:11) cost of introducing the wrong people into his life is a price he's unwilling to pay as he told STI brers in a weady Billionaire's interview basically it's an unfair system it's a bad system but it is a system that Warren uses and who am I to try to improve on that so he has multiple layers of filtering where he to ensure he only meets the right people and from there he invites him over to have chai he does like to meet new people but life is too short to pretend to be everyone's friend in his words let me just play you some more of that (20:42) conversation and so basically what I look for is when I meet somebody I reflect back after the tea I say okay what do I think and what's going on the most recent chai with PAB I had that person asked me to come to his place he lives very close to my home and he said I was happy with the Asam tea but I'm really a fan of darjiling tea and so he says I make a great cup of darjiling tea and would you come to my home uh so that we can have diling tea and I like the guy you know so it's not just one STI it's more than one I like (21:31) the guy and I said yeah so there will be a daring tea happening even though I didn't tell him this but you know diling is not my favorite but you know it's okay if the company is good we can deal with mediocrity can I go back and then ask whenever you say that you're a harsh grader and whenever you say you want to be direct of course you also want to be kind but like do do you literally say it was great meaning you or don't you even say it wasn't great meeting you if it wasn't great meeting and and then just (22:02) saying well I've enjoyed these meetings I'm not I'm not lying when I'm telling them I'm not I I have not I have not not enjoyed meeting these people because it been they go through a lot of filtering process before they show up and I learn from everyone you know so they're they're wonderful people but you know so I'm I'm very direct with them like uh there were the person who came a a few days back and uh they were interested in in going to dinner with my girlfriend and his wife right the four of us together now that (22:39) adds more layers of complexity yes okay you know because she's going to ask me a bunch of questions who what where what are we you what are we doing here what's going on right and to me it was obvious I didn't even I didn't even ask her it was obvious to me that um that's not going to be in the cards and so I just I just told the person you know I'm sorry you know we things are too busy we can't do it all the best he he had a very gracious response it was fine wonderful I think what you find is that when you're direct with people it's (23:21) not like they are sad I think they appreciate the cander Buy Low sell High Buy Low sell high it's a simple concept but not necessarily an easy concept right now High interest rates have crushed the real estate market prices are falling and properties are available at a discount which means fundrise believes now is the time to expand the fundrise flagship funds billion doll real estate portfolio you can add the fundrise flagship fund to your portfolio in minutes by visiting fundrise. (23:55) com Millennial that's Fu n d r i s c.com Millennial carefully consider the investment objectives risks charges and expenses of the fundrise flagship fund before investing this and other information can be found in the funds perspectus at fundrise.com Flagship this is a paid advertisement that was sort of a tangent but I wanted to make the point that monish very much Blends Lessons Learned From investing into the way he lives his life while there's probably a good business case for being selected with your time for better or worse for (24:31) extends that to his personal relationships too I have difficulty being as direct with people and protective of my time as pabra is but I can certainly appreciate the approach to life that he takes especially since in some ways it's molded after Warren Buffett pivoting back toward investing P's approach has evolved over time though I think this description from Forbes sounds about right they write that he quote has no interest in a company that looks 10% undervalued he's angl to make five times his money in few (24:59) years if he doesn't think the opportunity is blindingly obvious he passes again that's a pretty good way to put it do understand PB in his approach more I want to turn to William Green's excellent book Richard Weiser happier and its full profile of p as green outlines in 1994 PAB had reached $1 million in savings and as he sat waiting in the airport he began to read about Warren Buffett and was astonished at how well he had racked up investment returns earning 31% annually for 44 years up until that point Buffett would have (25:29) turned $1 invested with him in 1950 into $144,500 by 1994 in awe of both Buffett and the power of compounding green explains that PAB wondered whether he could mimic Buffett's winning approach and play a 30-year game of trying to turn his $1 million into a billion dollars investing as with so many things in life is one big game that we can seek to win at and PAB loves to play games particularly games he knows that he has an advantage the question then is how do you win the game as PR phrases it you've got to play (26:04) according to the rules and the good news is I'm playing against players who don't even know the rules the lesson for all of us here is that rather than trying to devise some complex way of beating the market PAB instead opted to identify the most skilled players at this game of investing analyze what had made them so successful and then mimic their approach with scrupulous detail P told green that he is actually a Shameless copycat and that everything in my life is cloned I have no original ideas he says you might (26:34) say that in some sense PAB is a testament to originality being overrated on the other hand though there's something especially original about his Devotion to cloning as William green puts it in richer Wiis are happier he and PAB have spent a lot of time together from annual visits to Omaha for birkshire meetings to sharing a bunk bed on an allight train ride across India along the way he quote came to appreciate the tremendous power of Bri's method of reverse engineering replicating and often improving on other (27:02) people's successful strategies pabb the most Relentless cloner I've ever encountered has taken the art of appropriation to such an extreme that paradoxically it seems oddly original P's approach is as simple as consistently observing the world inside and outside of his industry and whenever he would see someone doing something that he thought was smart he forced himself to adopt it in whatever way he could and after having studied Buffett and Munger so closely and embraced ing their Outlook so dearly he was surprised (27:31) to study other investors and learned that many of them followed completely different sets of guiding rules P's conclusion was that most money managers own too many stocks paid too much money for them and traded them too often in his words P expressed concerns that mutual funds are sitting there with 200 positions how can you find 200 companies that will all double then I look at what they own and they own things that are trading at 30 times earnings and I saw that they were all hosted there are no prize for frenetic activity in markets (28:01) instead investing is mostly a game of waiting for those rare moments when the odds of making money vastly out away the odds of losing it at least in P's view as green continues in his book this is a skill that PAB learned from Buffett who has been sublimely indifferent to the cries of the crowd and who can idly twiddle his thumbs for many years such as during the 1970 to 1972 Market Euphoria where he felt almost everything was trading at a crazy valuation when markets naturally returned to Earth in 1973 Buffett promptly bought a major (28:31) stake in the Washington Post company which he held for four decades for Bri compares the approach to being like a Spearman standing next to a stream most of the time you're doing nothing until suddenly a fat juicy salmon swims by and then you spring into action to Spirit and then it may be 6 months again before that next salmon goes by contrast that approach with the more typical money manager who takes many small and frequent bets to quote unquote diversify from P's perspective the odds just aren't in your favor enough to (29:00) rationalize all that activity in this vein he's known for saying that the number one skill in investing is patience specifically extreme patients for example in the 2008 crash PAB made 10 investments in short succession over about two months whereas in more normal times he bought only three stocks across all of 2012 and none in 2013 given his Supreme patience you won't be surprised to learn that his favorite quote is from the philosopher blae pascow who says that all of Humanity's problems stem from man's inability to sit quietly in a room alone (29:33) similarly you might say that birkshire shareholders have profited hugely from Buffett's inclination toward Financial Tranquility by distracting himself with playing online Bridge which helps counteract the natural bias for Action in investing all in all after first setting out to turn his $1 million into 1 billion P surpassed at Mark years sooner than expected after 10 exiting his nest egg in less than 5 years he didn't off friend friends and family interested in financial help to launch a fund to manage their money William green (30:03) continues to explain that for PAB one of the secrets of successful investing is to avoid anything that's too hard he automatically passes on investments in countries like Russia and Zimbabwe even their lack of respect for shareholders rights and he avoids all startups and IPOs since they're unlikely to be available for investment at bargain prices relatedly he's never shorted a stock because the maximum possible return is 100% if the stock Falls to zero whereas the losses have no cap if the stock keeps rising and rising and (30:33) that's not the sort of risk return profile he finds attractive in short Simplicity rules for PAB when asked by Green why more people don't Embrace his systematic method for cloning he told him quote they're not as Shameless as me they have more ego to be a great cloner you have to check your ego at the door so those are the highlights from William Green's delightful book richual Wier happier and the profile specifically on Minish I would of course recommend that you read the whole thing for yourself but hopefully that helps paint a more (31:03) complete picture of who p is as we continue on in learning from the master cloner I want to turn to his 2019 lecture to students from peaking University it's about an hour and a half long and an absolute joy to listen to Because P again is such a gifted Storyteller he shares with the students that while it's tempting to think otherwise not every great business is a great investment that is not to say you won't earn a decent rate of return by investing in great businesses which is something we've talked a lot about in (31:31) recent episodes but at least with mega caps the room for upside isn't enough for those Investments to generate these sort of outsized performance that's going to enable you to compound your wealth at more than 20 or 30% per year if as a game investing was simply about investing in the companies with the best business models it would be an easy game to play but it's not so simple because almost everyone else will see high quality businesses for what they are too with a massive payments company like master card that is an incredible (31:59) business High barriers to entry oligopoly and high Returns on invested Capital but of course it trades at a price earnings ratio of 40 which is more than twice the historic Market average so not only is the company already very large limiting its ability to massively grow its market value but also investors are already paying a rich price for that quality part of what distinguishes PAB is that he has such ambitious goals for his investment returns he's not happy with simply beating the market by a few percentage points over time he wants to (32:27) absolutely crush it and to do that you have to be extremely aggressive and well we talked earlier about how a single high quality investment held for long enough like holding Walmart since the 70s could be a GameChanger the wrinkle here is that buying into Walmart then was when the company was still at an early stage in its life cycle from October 1984 through 2000 Walmart increased its market value by 30X for Walmart to do that again from 2024 through 2040 its market capitalization would be over $1 19.5 trillion which is (32:58) roughly the size of China's entire economy today so obviously you just can't expect Walmart to be a 30 bagger at this point in its life cycle which is okay and shareholders may continue to do quite well with it but it's not going to have the massive outperformance that it once did either even though Walmart continues to have an incredible business it's not as simple as recognizing that and buying the company's stock and then becoming vastly wealthy this is a conversation pde tells the peing University students that he's had at (33:26) length with his friend gu spear who happen to love owning highquality Blue Chip companies like MasterCard after guy had already made a 12x return on MasterCard for Bri out to convince him that he wouldn't be able to earn those same returns again with the company due to its size so he should sell and look for opportunities with bigger payoffs while MasterCard was and is still a great company P doesn't think it's a great investment on the other hand with the small Indian company suntech realy he doesn't think it's thator of a (33:52) business yet but he loves it as an investment that is to say good companies can make for great Investments and great companies may only make for good Investments with that idea in mind he challenged guy to a bet in 2018 to see which stock would do the best or the next 12 years through 2030 the case for suntech realy is that it's a property developer in Mumbai and after getting to know the management of the company not only does PAB think they have a great grasp on Capital allocation but he knows they have this long-term Tailwind that (34:21) other investors may not be patient enough to wait for and that Tailwind comes from the fact that over the next few decades as India continues to IND realize Mumbai is going to get torn down and rebuilt in the same way that happened in many Chinese cities as they modernized and as Mumbai gets redeveloped and grows into one of the biggest cities in the world if not the biggest then sunch will be a major beneficiary of that but in the meantime there's this cloud of uncertainty hanging over whether this will really (34:47) happen and on what timeline and that makes for a great opportunity in a company that at least based on its track record isn't clearly exceptional in the same way that MasterCard is yet P argues as investors it's our duty to peel back the onion behind the facade of an obscure historically average real estate company in Mumbai HEC is a company that's poised to grow explosively in the coming years boosted by India's inevitable advance and a sound management team and forri is more than happy to hold suntech for a decade or (35:15) longer and see if that comes to fruition funny enough around halfway through that bet with guy spear it actually seems that guy is winning with MasterCard up around 90% in the past five years whereas suntech is up about half as much at 40 % and that 48% is for the price in rupees which has depreciated by 18% against the US dollar in the past few years so sunx performance in US dollar terms is actually lower but still we will see who ultimately wins in a few years and I think P's Point remains regardless of whether he wins the BET (35:46) great companies especially if they reach a certain size are not necessarily great Investments and more average companies with undervalued shares or a large runway for growth can in fact be great Investments I'd add to this to say that market prices for stocks are fundamentally about expectations since companies are valued based on the earnings they will create in the future the challenge with investing in large well-known great businesses is that expectations are going to be high great companies have high expectations for (36:13) their performance and if they do stumble they'll pay dearly for it as famously happened to Coca-Cola when it experimented with changing its signature formula for its drinks called New Coke that did not go over well to say the least but if you can find a company that the market thinks is just good but actually has hidden modes that make it a great business like prde thinks is the case with suntech then you can benefit from not only owning a company that can compound returns at high rates but you'll also have the Tailwind of the (36:39) price to earnings ratio rising in your favor as the market eventually realizes how good the company is there are over 50,000 stocks that trade publicly around the world and by P's estimate around 3,000 of them are severely undervalued while he probably can't understand most of those 3,000 companies all he needs to do is to be able to understand three or four of them well enough and he thinks he'll do just fine my takeaway is that to beat the market you need to look where the market isn't looking while MasterCard probably has 30 different (37:09) analysts tracking it on Wall Street some smaller and more obscure company may be structurally underf followed which makes its pricing less efficient and creates more opportunities to buy in at a discounted valuation either way though I really like how pde tells the peaking University students that you'll only ever completely understand a business once you own it and I think that so true when you have skin in the game there's just a different mindset subconsciously you have more reason to care about whether you actually understand the (37:35) details behind the business in a way that's not really possible when you only own it on paper in my personal investing I've taken a similar approach where I'll sometimes begin with a small position in something and that will either drive me to become more interested and dive more deeply in understanding it or I'll lose interest and just drop it I don't do it all that often but when I do it's when I'm on the fence about the opportunity and I want to give myself a extra boost to look at it more seriously and once I (38:01) have money on the line even if it's a very small amount it's much easier for me to get excited about digging into the weeds of it I would be remiss to talk about PAB today without at least touching on his wonderful book the dundo investor the natural question here obviously is what is dundo as Puri defines it dundo is a garati word dun comes from the Sanskrit word Donna meaning wealth Dand literally translated means Endeavors that create wealth the street translation of dundo is simply business and what is business if not an (38:32) Endeavor to create wealth more tangibly speaking you might say that to make dundo investments is to find nearly risk-free Bets with massive upside the classic heads I win Tails I don't lose much type of investment to show dundo in action PAB recounts the story of the patels an Indian family that in just over 30 years owned over half of the motels in America with no money and little formal education the patels immigrated to Southern California in the 1970s and began doing blueco collar work in the motel business at the same time (39:05) the US was entering a deep recession and gas prices were astronomically high so many families were skipping vacations to cut costs hotel and motel occupancy rates fell very low and as Banks foreclosed and properties a number of motels went to Market in distress at fire sell prices seeing the opportunity to buy these assets from motivated sellers Papa Patel realized they could purchase a motel business with 80% or 90% Bank financing even better is that he could house his entire family in the motel for free while they work to run (39:35) the business and if the business flopped Papa Patel knew that he and his wife could always go back to working overtime to save up enough money and just try again this was a classic dundo bat with a low risk and a very high reward with just a few thousand down payment the Batel bought the motel and saved on all their expenses since they didn't need to hire anyone outside of the family that combined with their Frugal lifestyle enabled the Mot PS to become quickly profitable as you can imagine the patels never lost their work ethic or caution (40:03) and oversaw a disciplined expansion across the country as they snapped up everything from motels to gas stations convenience stores and even luxury hotels the patels were a lowcost producer and they undercut competitors with prices that more commercial operations could hardly fathom charging work ethic business savviness and a bias toward dramatic action when the odds are massively in your favor is the epitome of dundo P's Own dundo Story came from launching trte a software business when he was 25 years old with just $30,000 in (40:33) retirement savings and $70,000 in max credit card limits that he could tap into as needed PAB dug into bankruptcy law in the US and realized that if his business fails he could just declare bankruptcy and essentially start from scratch again so he felt like he didn't have much to lose while the upside was that he could become independently wealthy while PAB worked his job during the day before and afterwards he worked on building his company and put his paycheck toward over head expenses once his startup reached $200,000 per year in (41:01) Revenue he quit his day job the worst case in his view was that he might lose $30,000 in savings and a job he didn't really care about but that was all since he had no wife or family to support in the best case scenario the idea might make him a millionaire which it did P's model for making dundo bets distills down to investing in simple existing businesses where there's low risk but High uncertainty for example with the motels they were lowrisk in that the patels personally had little to lose but also because Matel were not likely to be (41:32) phased out of existence there was just a recession that created a cloud of uncertainty over the business which if anything created an opportunity for patient investors like the patels even better if you can snap up distressed assets where the seller is being forced to sell because of a bank for closing on them to be dundo is to always have an eye open for dundo investment opportunities and betting heavily when the upside significantly outweighs the downside in his own way Papa Patel was a cloner like Ry rather than try and (41:59) launch the next hot tech company and create some disruptive innovation Papa Patel embraced the business model that he knew was proven to work did so at distress prices and then built a lowcost moat by being able to profitably afford rates that none of his competitors could while no one knew when the recession would end that was hurting Matel businesses Papa Matel knew as a question of when not if and that uncertainty gave him the cover to buy and build a business at a cost that he would otherwise never be able to do so at the (42:27) example with the patels really resonates with me because I know I personally spend a lot of time looking at businesses to own in public markets when there are probably so many wonderful privately owned businesses that I could acquire and operate myself or hire someone else to operate I also appreciate the personal elements being factored into dundo risk taking here as in p felt he had nothing to lose with transc because he was young didn't have that much money and had no one depending on him so of course he could afford to (42:53) take what looks like a big risk because it wasn't really that big of a risk same with the while popup Hotel did have dependence they were already very poor and they were accustomed to living that way so losing all their savings and a failed Motel business wasn't really as big of a risk as it might seem on paper but obviously the upside has been higher than I'm sure they could have ever dreamed a dundo mindset in my opinion is about not only pursuing high reward bets but also bringing a financial and personal perspective to your risk (43:20) tolerance if the patels lived stable middle class lives they probably wouldn't have jumped on the opportunity to buy a motel business and if PAB had a wife and kids depending on him he might have just kept his day job it's not that you can't chase big opportunities if you have a family it's just that you have more at stake and that needs to be factored into your risk reward calculations the dundo investor is a pretty easy to read book but it touches on the nuances of risk and reward in a way that few other books capture with (43:48) that said I want to begin wrapping up today's episode Manish p is a uniquely eccentric independent thinker devoted to being as pragmatic as possible his Common Sense approach to investing takes cloning to the extreme yet that cloning has worked out wonderfully for him and enabled him to build relationships with the very people he cloned like Warren Buffett and Charlie Munger P Bri is one of my favorite investors to listen to because he really does tell the best stories someone who has spent so much time hanging out with Charlie Munger (44:15) naturally has some interesting things to say we haven't really touched on it today but what's also great about B is not only his Devotion to teaching others but also his Devotion to charitable work his charity in India is called dakshana and his many lives for the better if you're curious to learn more about it I'll link to it in the show notes but Bri reminds me that investing is a game and to win at it we should learn as much as possible from the best players of that game and after spending many years carefully studying others he too became (44:43) one of the best players at the game of investing who ironically I am now studying he also reminds me that investing should be fun as I said it's a game and one we choose to play if picking individual stocks is stressful or overwhelming for you then don't do it just go buy an index fund PAB and others like him get immense Joy from trying to stack the odds in their favor and win more than anyone else and investing and that's why he'd be happy to do it even if it wasn't for money whether it's in investing or something else P's most (45:13) important lesson for us all is to go and find that thing we're so passionate about we continue doing it even if we won the lottery tomorrow because again it's not about the money to put a bow on this conversation about Manish PAB today let me leave you with one of my favorite quotes from him he says the following you don't make money when you buy stocks and you don't make money when you sell stocks you make money by waiting that's all for today folks I hope you have the patience to embrace your inner dundo investor I'll see you again next week (45:42) hey guys this is your Millennial investing host Shan Ali when I first started learning as a value investor I had no idea what direction to go in there's just so much to try and wrap your head around but it's never too late to get smarter about Stock Investing from the ground up after spending years interviewing and studying the best stock investors as a company at the investors podcast Network I've worked to distill those learnings into a simple course for you why did I do that so I can help you master the principles of excellent (46:12) lifelong investing I was a fan of the investors podcast for years before I joined the team and I always wanted a course that broke down the most important insights from a decade of interviews with leading investors the course is great for both beginners and pros from study studing what the Legends actually do to small practical ways to build your wealth over time I'll take you through 10 different sections covering the basics of what a stock actually is and how stock markets work to strategies to optimize your (46:40) retirement savings picking great companies what to look for in ETFs how much you should invest and how to monitor your Investments plus so much more by the time you're done you'll be ready to invest in the stock market learning plenty of tricks from the pros along the way to access the course and begin learning how to invest like the Legends just visit thinest podcast. (47:01) com getstarted with stocks that's the investors podcast.com slet started with stocks and for a limited time you can use code mi15 for a 15% discount at checkout that's mi15 when checking out as Buffett once said I want to have my cake and eat it too I like quality businesses I like great Capital allocation I like high Returns on Capital but I demand value finding great Compounders over time is namely a question of correctly identifying business quality and price can be used as a hedge against whether you're able to do that correctly if you (47:37) buy a company you think is a highquality compounder based both on its track record and opportunities looking forward and you can buy it near it's F of twoe low you're probably going to come out okay on the investment even if its Returns on Capital going forward are considerably lower than expected you may or may not earn a market beating profit on it but you'll at least have a decent company and you'll probably have paid a very re
Investment Wisdom: Lessons from Mohnish Pabrai w/ Shawn O’Malley (MI382)
Summary
Transcript
(00:00) great companies especially if they reach a certain size are not necessarily great Investments and more average companies with undervalued shares or a large runway for growth can in fact be great Investments I'd add to this to say that market prices for stocks are fundamentally about expectations since companies are valued based on the earnings they will create in the future the challenge with investing in large well-known great businesses is that expectations are going to be high great companies have high expectations for (00:27) their performance but if you can find a company that the market thinks is just good but actually has hidden modes that make it a great business like prde thinks is the case with suntech then you can benefit from not only owning a company that can compound returns at high rates but you'll also have the Tailwind of the price earnings ratio rising in your favor as the market eventually realizes how good the company is hello before we dive into the video be sure to click that subscribe button so you never miss an episode show us (00:58) some love by giving a thumbs up and Shar sharing your thoughts in the comments your support really means everything to us today I'll be digging into the wisdom of Manish PAB a billionaire investor with a market beating track record spending some 25 years I'll pull from a variety of sources to distill down the most essential lessons to be learned from PAB true to paba's own teachings on the value of cloning habits and tactics of great investors I'll be looking to shamelessly clone in myself cloning is such a powerful concept because it leans (01:27) into following the path blazed before us by winning investors rather than trying to reinvent the wheel studying what has worked and avoiding what hasn't worked for the best investors across their careers is almost like a cheat code in a way allowing new investors to quickly level up their game while saving them lots of time and pain from learning these lessons through their own experience the hard way the challenge is in actually being able to internalize these lessons without having to learn them the hard way monish is a master of (01:53) cloning both Warren Buffett and Charlie Munger taking what has worked for them and trying to apply it to his own life and investing strategy over the years PAB got to know Buffett after spending $650,000 to have a charity lunch with him which he later said was worth every penny he actually felt the two and a half hour meal with Buffett was under price given what he got out of it and from there he became even closer with Charlie Munger before he passed on Fridays they would play bridge together which was munger's favorite game PAB has (02:21) truly had a rare chance to study the best investors to ever live up close and personal and that has surely rubbed off on him but I want to clone the master cloner and soak up as much knowledge from him as possible having said that let's begin with p's 2023 presentation during Burkshire weekend where he gave an hourlong talk at the University of Nebraska which became an instant hit throughout value investing circles one simple metaphor dominates the talk that is circling the wagons if you ever watch the TV series Yellowstone you might know (02:52) the reference imagine yourself as a 19th century Pioneer trailblazing across the wild west a world with unknown threats lurking around every corner where something as trivial as getting the wheels of your stage coach stuck in the mud could be life or death circling the wagons then is a defensive maneuver it's a last Stitch effort to make a stand and fend off attacks from Native American tribes on this new frontier cautious thinking and deliberate action are critical there was very little room for error and any catastrophically wrong (03:21) decision could Mark the end of your journey investing is less dire but it's similar in that you're operating in an uncertain Arena where you can never take safety for granted and a single big mistake can be both easy to make and devastating yet as PAB points out while investors make so many decisions across their careers only a small handful of them about 4% end up being of any lasting consequence as Warren Buffett writes in his 2022 letter to birkar shareholders quote over the years I have made many mistakes (03:53) consequently our extensive collection of businesses currently consists of few Enterprises that have truly extraordinary economics many that enjoy very good economic characteristics and a large group that are marginal let me go ahead and say that again Warren Buffett believes bur shire's vast Investment Portfolio has a cohort of companies that are just marginal at best that isn't modesty or self- effacement it's just economic reality over a lifetime a few Big Winners and key decisions end up making all the difference as P breaks it (04:23) down over six decades Buffett has made 300 plus important decisions as Burkshire CEO including 80 plus business acquisition over 200 common stock Investments and 10 plus Key Personnel hires yet Buffett says the following in 58 years of burk share management most of my Capital allocation decisions have been no better than so so our satisfactory results have been the product of about a dozen truly good decisions some of these truly great decisions stem from investments in companies like Geico Coca-Cola American (04:53) Express apple and National Indemnity as well as in people like a Jane who runs berkshire's Insurance operations P explains that with these truly great and impactful decisions it wasn't the initial choice to buy that mattered most it was the decision to continue holding those Investments by luck or skill anyone can recognize attractive businesses to own one of the differentiating factors for investors like PAB and Buffett is not to lose sight of what matters most though as in many people have made these same investment decisions along the way but (05:25) few have held them as long as birkshire and reaped the full benefits of the decision to invest in companies with lasting competitive advantages across more than 300 important decisions Brar kept plenty of poor and mediocre businesses but they also held onto their biggest winners too which more than made up for the average performance from the rest of the portfolio the metaphor of P makes is to say that investing is a very forgiving business so long as you don't cut the flowers and water the weeds too many people make the mistake of doing (05:54) all the work to understand and identify a great business and then after a few years despite no real change in the the business they decide to sell maybe they feel as though they already earned a decent profit that they want to lock in or maybe they simply get bored and are looking for Action whatever it is they rebalance over time away from their biggest winners and correspondingly their best decisions hence cutting the flowers while watering the weeds by making just a handful of great decisions across almost six decades and holding on (06:22) to those winners berkshire's compounded returns at 20% per year trouncing the S&P 500's 9.9% annual returns from 196 5 through 2022 that difference in compounding of 10 percentage points a year over that full time period results in almost 3.8 million per of cumulative gains versus 24,000 per of cumulative gains for the broader market so a dozen or so great bets over a very long period of time drove a difference of over 3 million per of cumulative returns to go back to the circling the wagons metaphor these big winners for birkshire and any (06:56) long-term investors portfolio make up the stage coaches that defend the rest to the portfolio a few excellent investments will defend your portfolio from recessions stock market panics and whatever other risks await you in this uncertain world to really make the point PAB uses the South African publishing company naspers as an example back in 2001 naspers purchased a 46. (07:18) 5% stake in the Chinese company ensent for only $32 million while naspers itself was a $500 million company after ent's IPO in 2004 that stake in ensent was deluded down to just 36% but over the next 14 years nasper didn't sell a single share of tensent while tensent stock grew at 50% per year with that incredible growth by 2018 tinson was a $530 billion company and nasra own shares in it worth some1 170 billion in less than two decades tinent went from representing about 6% of nasar's market value to more than 100% of it since (07:54) NASA's own Market valuation was actually less than the value of its stake in t Cent what made the difference for NASA was not just their decision to invest in tensent but their decision to continue holding it you can easily see how after a decade of 50% plus returns per year from ensent elevating nasar's market value from the hundreds of millions to the hundreds of billions they might have wanted to take some money off the table and trim their position in ensent instead nasper circled the wagons around ensent and that is what has generated (08:21) some of their incredible incredible returns over that period another great example of not cutting the flowers and watering the weeds or circling the wagons to use both met fors comes from investor Nick sleep between 2001 and 2013 Nick sleep's Nomad fund earned returns of 18.4% per year almost triple what the msci world stock index earned over that same period with $3 billion in assets under management sleep dissolved the fund in 2014 yet his simple recommendation to his investors was to Simply continue holding Amazon Costco (08:51) and birkshire for the next 10 years and equal concentration his investors could effectively recreate the portfolio without the fees so long as they had these same conviction to hold on to those companies for an extended period it may be of little surprise but many of the funds investors could not stomach doing that even at sleep's explicit advice and they Diversified to their own detriment sleep's concentrated portfolio despite paying off hugely was too much for many of his funds investors to swallow while Costco and birkshire have (09:19) been great bets Amazon was the key investment to circle the wagons around and continue holding even if everything else in sleep's portfolio had gone to zero with a 20% stake in Amazon the portfolio would have outperformed the S&P 500 by six percentage points from 2004 through 2023 so the many mistakes they made along the way simply didn't matter that much when they were right in such a big way about buying and holding Amazon forever even with Ben Graham who was Warren Buffett's mentor and the father of value investing his best (09:47) investment ever was in Geico a high quality company that he held for more than a decade yet at least in part it stood at odds with the investment method he had preached of buying overly cheap stocks at a discount to their intrinsic value and then selling them within a few months or years once they reached their full value Geico was such a good investment to hold indefinitely that Graham violated some of his personal rules around portfolio sizing and invested 25% of his partnership's assets into the company despite normally having (10:14) a limit of investing no more than 5% in a single investment as Graham wrote decades ago quote ironically enough the aggregate of profits acre from this single investment decision far exceeded the sum of all the others realized through 20 years of wide ranging operations and specialized Fields involving much investigation endless pondering and countless individual decisions he adds quote one lucky break or one supremely shrew decision can we tell them apart this may count for more than a lifetime of journeyman efforts in (10:46) 25 years Geico was in the parlament of Peter Lynch a 500 bagger again I love how Ben Graham frames it it's not just a question of luck he says behind the luck or The crucial decision there must usually exist a background of preparation and discipline one needs to be sufficiently established and recognized so that these opportunities will knock at his particular door one must have the means the judgment and the courage to take advantage of them one big correct investment held for a long time can make or break a career in 1976 (11:20) Graham is recorded as saying that after having made an investment in Geico in 1948 from then on he and his Investment Partners seem to be brilliant people if Ram had sold Geico in 1950 as opposed to holding it for more than another two decades he would have short changed himself and may not be remembered with the same reverence as he is today which stems from both his wonderful teachings and his track record of success while long-term investing with concentrated bats on single great companies was not really at the core of Graham's (11:49) philosophy it worked out fantastically well for him with Geico and that is what in part inspired Buffett to acquired Geico and fool through birkshire and shift his perspective toward buying wonderful companies at fair prices over Fair companies at wonderful prices continuing on with pb's talk on circling the wagons he explains that in the 1960s and 1970s it became quite fashionable to invest in the 50 largest and best known US Stocks which was an approach known as a nifty50 where many thought that you would do well by purchasing these (12:19) companies regardless of the price while this episode of Market history was essentially a bubble that burned investors over a long enough time the strategy didn't work out as poorly as you might think it's controversial but if we include Walmart in the nifty50 that ends up being the stock to circle the wagons around with a portfolio of nifty50 stocks in 1970 and just a 2% stake in Walmart over the next 52 years even if every other company in your portfolio went bankrupt your small stake in Walmart alone would have been enough (12:49) to deliver a market beating average annual return of 133% per year for your entire portfolio's value obviously you would have done considerably better by just owning Walmart but even a small position that you hold on to in a company that becomes one of the biggest winners in markets is more than enough to redeem an otherwise failing portfolio the hardest part is holding on to Walmart for 50 years or holding on to Amazon and tensent for 20 years in the last century a small percentage of stocks have been such big Winners that (13:18) they drive the majority of the Market's returns While most others fail or underperform by investing in an index fund you're ensuring that you always have some exposure to these big Winners which will deliver You Average stock market returns but to really separate yourself as a stock investor to the extent that Buffett sleep and P have you need to correctly identify these companies that have the potential to be big Winners bet big on them and hold them indefinitely while knowing that many of them will not work out but the (13:46) few that do will fully make up for it even without Walmart The nifty50 Returned 10.2% per year between 1972 and 2023 yet almost no one would have held on to that portfolio of stocks for long enough to earn those returns because the nifty50 stocks like Disney McDonald's and Coca-Cola collectively lost half of their value in the bare Market of 1973 and 1974 even at ridiculously expensive valuations and a subsequent major bare Market holding on to the top 50 US companies would have worked out well for you it's just that few people could have (14:16) stomached that sort of volatility along the way without question I'm sure most nifty50 investors bailed on the strategy either in the 1973 to 74 bare Market or sometime not that long after P's key less are that firstly a very large error rate is par for the course with investing secondly don't cut the flowers to water the weeds hold on to great businesses for dear life and thirdly avoid paying ludicrous prices for great businesses when Brookshire bot Coca-Cola American Express and Geico they did so at modest valuations relative to their (14:49) business quality and that complemented the returns these businesses were able to compound over time additionally PAB invokes another great investor chck Acra and suggests we should Embraces three-legged stool approach to investing which entails focusing on buying great businesses run by great people with long runways for future growth he reminds us that when even great businesses appear fully priced or even significantly overpriced based on what we've gone over here today you would still not want to sell the stock of a big winnerless it (15:18) truly reaches a point of being very very clearly and egregiously overpriced relatedly a single great stock like Walmart or Amazon can grow over time to become more than 6 % 70% or even 99% of your portfolio but that concentration un itself is not necessarily a reason to trim the flowers Buffett has never trimmed his stake in birkar even though it is over 99% of his net worth it was the same with naspers and tensent where naspers went many years without trimming despite its tints and stake ballooning to consume its entire Market valuation (15:52) so Pai has taken this to heart and his portfolio at least as of 2023 is extremely concentrated with 70% and just three bets and one bet on a Turkish company called racist made up more than 40% of that pie he tells the audience that the risk is not in getting stuck holding companies like IBM or Intel that are supplanted by competition but in being too trigger happy to let go of the great companies in your portfolio for instance the opportunity costs of selling Nvidia in 2020 are just massive the company has added $3.3 trillion in (16:23) market value in 5 years up from a market cap of $144 billion I'm sure there are people who believed in Nvidia from 2015 through 2020 who sold the company during the pandemic crash never got back in and missed out on all that upside the gains from an Nvidia more than make up for the ibms and intels of your portfolio and that's the whole point for every big winner you can have a dozen mediocre companies and still do incredibly well over a multi-decade Time Horizon before we go any further in studying PB I want (16:53) to revisit the lunch he had with Buffett that I mentioned at the top of the show he actually did it jointly with another Fain value investor guy spear both of them walked away in awe of Buffett unsurprisingly and particularly in how he and Charlie Munger approached everything they did with honesty and integrity habri has said that the two use an internal yard stick to measure integrity and in doing so they would ask a rather unconventional question that is would you rather be the greatest lover in the world yet be known as the worst (17:24) or would you rather be the worst lover and known as the greatest Buffett reported ly told P that if you know how to answer that question correctly then you have the right internal yard stick this also plays into the old Buffett aism that you should never do anything in life if you would be ashamed of seeing it printed on the front page of your hometown newspaper for your friends and family to see another takeaway that PAB has cloned from Buffett is in getting comfortable saying no Buffett has relayed before that quote the (17:53) difference between successful people and really successful people is that really successful people say no to almost everything during their lunch PAB got to Peak at Buffett's planner and saw that it was almost completely bare as gu spear put it to scene DC Buffett likes to leave his time unstructured and to leave plenty of room for spontaneity it's very tempting to say yes to every meeting that your colleagues or business contacts propose but you'll end up filling your calendar with a bunch of events that at a minimum distract you (18:21) from working deeply that isn't to say Warren Buffett doesn't do anything all day he just doesn't formally schedule many things instead he leaves slate open so he can brainstorm read deeply or call people as he sees fit this is something that Bill Gates has actually validated too after meeting Buffett in 1991 he said that Buffett's calendar was largely empty having a packed calendar doesn't make you a more serious person the discipline to control and strictly value your time by saying no to lots of things is an important skill for PAB he told an (18:51) audience back in 2019 that he has over 400 investors in his fund globally but he can't remember the last time he a call or exchange emails with any of them he's defined the expectations and those relationships and also selected to work with investors who are like-minded so they don't feel like they have to call them up every quarter and ask what's going on in the portfolio there's just a level of trust there that makes it very easy to work together Buffett for his part tells Burkshire shareholders that once a year he will make himself fully (19:17) available to them and for the rest of that year he's working and not available and that one day is of course the Burkshire shareholder meeting where he sat on stage alongside Charlie for many decades and answered questions for six hours plus the way P thinks about it is that like Warren he wants to configure his work in a way such that he would be happy to do it even if it weren't his job if he had to answer a ton of calls and emails from anxious investors every day that would very much show like work and he (19:42) certainly wouldn't do it once reaching some independently wealthy status that he's already achieved so PAB has rolled his ethos into his personal life as he tries to live true to his inner score card in part this is about being highly selective about the people he allows into his life and being so selective PAB finds comfort and knowing there are billions of people on the planet so the opportunity cost of missing out on a great personal connection is pretty low because he always had the chance to meet new potentially great people but the (20:11) cost of introducing the wrong people into his life is a price he's unwilling to pay as he told STI brers in a weady Billionaire's interview basically it's an unfair system it's a bad system but it is a system that Warren uses and who am I to try to improve on that so he has multiple layers of filtering where he to ensure he only meets the right people and from there he invites him over to have chai he does like to meet new people but life is too short to pretend to be everyone's friend in his words let me just play you some more of that (20:42) conversation and so basically what I look for is when I meet somebody I reflect back after the tea I say okay what do I think and what's going on the most recent chai with PAB I had that person asked me to come to his place he lives very close to my home and he said I was happy with the Asam tea but I'm really a fan of darjiling tea and so he says I make a great cup of darjiling tea and would you come to my home uh so that we can have diling tea and I like the guy you know so it's not just one STI it's more than one I like (21:31) the guy and I said yeah so there will be a daring tea happening even though I didn't tell him this but you know diling is not my favorite but you know it's okay if the company is good we can deal with mediocrity can I go back and then ask whenever you say that you're a harsh grader and whenever you say you want to be direct of course you also want to be kind but like do do you literally say it was great meaning you or don't you even say it wasn't great meeting you if it wasn't great meeting and and then just (22:02) saying well I've enjoyed these meetings I'm not I'm not lying when I'm telling them I'm not I I have not I have not not enjoyed meeting these people because it been they go through a lot of filtering process before they show up and I learn from everyone you know so they're they're wonderful people but you know so I'm I'm very direct with them like uh there were the person who came a a few days back and uh they were interested in in going to dinner with my girlfriend and his wife right the four of us together now that (22:39) adds more layers of complexity yes okay you know because she's going to ask me a bunch of questions who what where what are we you what are we doing here what's going on right and to me it was obvious I didn't even I didn't even ask her it was obvious to me that um that's not going to be in the cards and so I just I just told the person you know I'm sorry you know we things are too busy we can't do it all the best he he had a very gracious response it was fine wonderful I think what you find is that when you're direct with people it's (23:21) not like they are sad I think they appreciate the cander Buy Low sell High Buy Low sell high it's a simple concept but not necessarily an easy concept right now High interest rates have crushed the real estate market prices are falling and properties are available at a discount which means fundrise believes now is the time to expand the fundrise flagship funds billion doll real estate portfolio you can add the fundrise flagship fund to your portfolio in minutes by visiting fundrise. (23:55) com Millennial that's Fu n d r i s c.com Millennial carefully consider the investment objectives risks charges and expenses of the fundrise flagship fund before investing this and other information can be found in the funds perspectus at fundrise.com Flagship this is a paid advertisement that was sort of a tangent but I wanted to make the point that monish very much Blends Lessons Learned From investing into the way he lives his life while there's probably a good business case for being selected with your time for better or worse for (24:31) extends that to his personal relationships too I have difficulty being as direct with people and protective of my time as pabra is but I can certainly appreciate the approach to life that he takes especially since in some ways it's molded after Warren Buffett pivoting back toward investing P's approach has evolved over time though I think this description from Forbes sounds about right they write that he quote has no interest in a company that looks 10% undervalued he's angl to make five times his money in few (24:59) years if he doesn't think the opportunity is blindingly obvious he passes again that's a pretty good way to put it do understand PB in his approach more I want to turn to William Green's excellent book Richard Weiser happier and its full profile of p as green outlines in 1994 PAB had reached $1 million in savings and as he sat waiting in the airport he began to read about Warren Buffett and was astonished at how well he had racked up investment returns earning 31% annually for 44 years up until that point Buffett would have (25:29) turned $1 invested with him in 1950 into $144,500 by 1994 in awe of both Buffett and the power of compounding green explains that PAB wondered whether he could mimic Buffett's winning approach and play a 30-year game of trying to turn his $1 million into a billion dollars investing as with so many things in life is one big game that we can seek to win at and PAB loves to play games particularly games he knows that he has an advantage the question then is how do you win the game as PR phrases it you've got to play (26:04) according to the rules and the good news is I'm playing against players who don't even know the rules the lesson for all of us here is that rather than trying to devise some complex way of beating the market PAB instead opted to identify the most skilled players at this game of investing analyze what had made them so successful and then mimic their approach with scrupulous detail P told green that he is actually a Shameless copycat and that everything in my life is cloned I have no original ideas he says you might (26:34) say that in some sense PAB is a testament to originality being overrated on the other hand though there's something especially original about his Devotion to cloning as William green puts it in richer Wiis are happier he and PAB have spent a lot of time together from annual visits to Omaha for birkshire meetings to sharing a bunk bed on an allight train ride across India along the way he quote came to appreciate the tremendous power of Bri's method of reverse engineering replicating and often improving on other (27:02) people's successful strategies pabb the most Relentless cloner I've ever encountered has taken the art of appropriation to such an extreme that paradoxically it seems oddly original P's approach is as simple as consistently observing the world inside and outside of his industry and whenever he would see someone doing something that he thought was smart he forced himself to adopt it in whatever way he could and after having studied Buffett and Munger so closely and embraced ing their Outlook so dearly he was surprised (27:31) to study other investors and learned that many of them followed completely different sets of guiding rules P's conclusion was that most money managers own too many stocks paid too much money for them and traded them too often in his words P expressed concerns that mutual funds are sitting there with 200 positions how can you find 200 companies that will all double then I look at what they own and they own things that are trading at 30 times earnings and I saw that they were all hosted there are no prize for frenetic activity in markets (28:01) instead investing is mostly a game of waiting for those rare moments when the odds of making money vastly out away the odds of losing it at least in P's view as green continues in his book this is a skill that PAB learned from Buffett who has been sublimely indifferent to the cries of the crowd and who can idly twiddle his thumbs for many years such as during the 1970 to 1972 Market Euphoria where he felt almost everything was trading at a crazy valuation when markets naturally returned to Earth in 1973 Buffett promptly bought a major (28:31) stake in the Washington Post company which he held for four decades for Bri compares the approach to being like a Spearman standing next to a stream most of the time you're doing nothing until suddenly a fat juicy salmon swims by and then you spring into action to Spirit and then it may be 6 months again before that next salmon goes by contrast that approach with the more typical money manager who takes many small and frequent bets to quote unquote diversify from P's perspective the odds just aren't in your favor enough to (29:00) rationalize all that activity in this vein he's known for saying that the number one skill in investing is patience specifically extreme patients for example in the 2008 crash PAB made 10 investments in short succession over about two months whereas in more normal times he bought only three stocks across all of 2012 and none in 2013 given his Supreme patience you won't be surprised to learn that his favorite quote is from the philosopher blae pascow who says that all of Humanity's problems stem from man's inability to sit quietly in a room alone (29:33) similarly you might say that birkshire shareholders have profited hugely from Buffett's inclination toward Financial Tranquility by distracting himself with playing online Bridge which helps counteract the natural bias for Action in investing all in all after first setting out to turn his $1 million into 1 billion P surpassed at Mark years sooner than expected after 10 exiting his nest egg in less than 5 years he didn't off friend friends and family interested in financial help to launch a fund to manage their money William green (30:03) continues to explain that for PAB one of the secrets of successful investing is to avoid anything that's too hard he automatically passes on investments in countries like Russia and Zimbabwe even their lack of respect for shareholders rights and he avoids all startups and IPOs since they're unlikely to be available for investment at bargain prices relatedly he's never shorted a stock because the maximum possible return is 100% if the stock Falls to zero whereas the losses have no cap if the stock keeps rising and rising and (30:33) that's not the sort of risk return profile he finds attractive in short Simplicity rules for PAB when asked by Green why more people don't Embrace his systematic method for cloning he told him quote they're not as Shameless as me they have more ego to be a great cloner you have to check your ego at the door so those are the highlights from William Green's delightful book richual Wier happier and the profile specifically on Minish I would of course recommend that you read the whole thing for yourself but hopefully that helps paint a more (31:03) complete picture of who p is as we continue on in learning from the master cloner I want to turn to his 2019 lecture to students from peaking University it's about an hour and a half long and an absolute joy to listen to Because P again is such a gifted Storyteller he shares with the students that while it's tempting to think otherwise not every great business is a great investment that is not to say you won't earn a decent rate of return by investing in great businesses which is something we've talked a lot about in (31:31) recent episodes but at least with mega caps the room for upside isn't enough for those Investments to generate these sort of outsized performance that's going to enable you to compound your wealth at more than 20 or 30% per year if as a game investing was simply about investing in the companies with the best business models it would be an easy game to play but it's not so simple because almost everyone else will see high quality businesses for what they are too with a massive payments company like master card that is an incredible (31:59) business High barriers to entry oligopoly and high Returns on invested Capital but of course it trades at a price earnings ratio of 40 which is more than twice the historic Market average so not only is the company already very large limiting its ability to massively grow its market value but also investors are already paying a rich price for that quality part of what distinguishes PAB is that he has such ambitious goals for his investment returns he's not happy with simply beating the market by a few percentage points over time he wants to (32:27) absolutely crush it and to do that you have to be extremely aggressive and well we talked earlier about how a single high quality investment held for long enough like holding Walmart since the 70s could be a GameChanger the wrinkle here is that buying into Walmart then was when the company was still at an early stage in its life cycle from October 1984 through 2000 Walmart increased its market value by 30X for Walmart to do that again from 2024 through 2040 its market capitalization would be over $1 19.5 trillion which is (32:58) roughly the size of China's entire economy today so obviously you just can't expect Walmart to be a 30 bagger at this point in its life cycle which is okay and shareholders may continue to do quite well with it but it's not going to have the massive outperformance that it once did either even though Walmart continues to have an incredible business it's not as simple as recognizing that and buying the company's stock and then becoming vastly wealthy this is a conversation pde tells the peing University students that he's had at (33:26) length with his friend gu spear who happen to love owning highquality Blue Chip companies like MasterCard after guy had already made a 12x return on MasterCard for Bri out to convince him that he wouldn't be able to earn those same returns again with the company due to its size so he should sell and look for opportunities with bigger payoffs while MasterCard was and is still a great company P doesn't think it's a great investment on the other hand with the small Indian company suntech realy he doesn't think it's thator of a (33:52) business yet but he loves it as an investment that is to say good companies can make for great Investments and great companies may only make for good Investments with that idea in mind he challenged guy to a bet in 2018 to see which stock would do the best or the next 12 years through 2030 the case for suntech realy is that it's a property developer in Mumbai and after getting to know the management of the company not only does PAB think they have a great grasp on Capital allocation but he knows they have this long-term Tailwind that (34:21) other investors may not be patient enough to wait for and that Tailwind comes from the fact that over the next few decades as India continues to IND realize Mumbai is going to get torn down and rebuilt in the same way that happened in many Chinese cities as they modernized and as Mumbai gets redeveloped and grows into one of the biggest cities in the world if not the biggest then sunch will be a major beneficiary of that but in the meantime there's this cloud of uncertainty hanging over whether this will really (34:47) happen and on what timeline and that makes for a great opportunity in a company that at least based on its track record isn't clearly exceptional in the same way that MasterCard is yet P argues as investors it's our duty to peel back the onion behind the facade of an obscure historically average real estate company in Mumbai HEC is a company that's poised to grow explosively in the coming years boosted by India's inevitable advance and a sound management team and forri is more than happy to hold suntech for a decade or (35:15) longer and see if that comes to fruition funny enough around halfway through that bet with guy spear it actually seems that guy is winning with MasterCard up around 90% in the past five years whereas suntech is up about half as much at 40 % and that 48% is for the price in rupees which has depreciated by 18% against the US dollar in the past few years so sunx performance in US dollar terms is actually lower but still we will see who ultimately wins in a few years and I think P's Point remains regardless of whether he wins the BET (35:46) great companies especially if they reach a certain size are not necessarily great Investments and more average companies with undervalued shares or a large runway for growth can in fact be great Investments I'd add to this to say that market prices for stocks are fundamentally about expectations since companies are valued based on the earnings they will create in the future the challenge with investing in large well-known great businesses is that expectations are going to be high great companies have high expectations for (36:13) their performance and if they do stumble they'll pay dearly for it as famously happened to Coca-Cola when it experimented with changing its signature formula for its drinks called New Coke that did not go over well to say the least but if you can find a company that the market thinks is just good but actually has hidden modes that make it a great business like prde thinks is the case with suntech then you can benefit from not only owning a company that can compound returns at high rates but you'll also have the Tailwind of the (36:39) price to earnings ratio rising in your favor as the market eventually realizes how good the company is there are over 50,000 stocks that trade publicly around the world and by P's estimate around 3,000 of them are severely undervalued while he probably can't understand most of those 3,000 companies all he needs to do is to be able to understand three or four of them well enough and he thinks he'll do just fine my takeaway is that to beat the market you need to look where the market isn't looking while MasterCard probably has 30 different (37:09) analysts tracking it on Wall Street some smaller and more obscure company may be structurally underf followed which makes its pricing less efficient and creates more opportunities to buy in at a discounted valuation either way though I really like how pde tells the peaking University students that you'll only ever completely understand a business once you own it and I think that so true when you have skin in the game there's just a different mindset subconsciously you have more reason to care about whether you actually understand the (37:35) details behind the business in a way that's not really possible when you only own it on paper in my personal investing I've taken a similar approach where I'll sometimes begin with a small position in something and that will either drive me to become more interested and dive more deeply in understanding it or I'll lose interest and just drop it I don't do it all that often but when I do it's when I'm on the fence about the opportunity and I want to give myself a extra boost to look at it more seriously and once I (38:01) have money on the line even if it's a very small amount it's much easier for me to get excited about digging into the weeds of it I would be remiss to talk about PAB today without at least touching on his wonderful book the dundo investor the natural question here obviously is what is dundo as Puri defines it dundo is a garati word dun comes from the Sanskrit word Donna meaning wealth Dand literally translated means Endeavors that create wealth the street translation of dundo is simply business and what is business if not an (38:32) Endeavor to create wealth more tangibly speaking you might say that to make dundo investments is to find nearly risk-free Bets with massive upside the classic heads I win Tails I don't lose much type of investment to show dundo in action PAB recounts the story of the patels an Indian family that in just over 30 years owned over half of the motels in America with no money and little formal education the patels immigrated to Southern California in the 1970s and began doing blueco collar work in the motel business at the same time (39:05) the US was entering a deep recession and gas prices were astronomically high so many families were skipping vacations to cut costs hotel and motel occupancy rates fell very low and as Banks foreclosed and properties a number of motels went to Market in distress at fire sell prices seeing the opportunity to buy these assets from motivated sellers Papa Patel realized they could purchase a motel business with 80% or 90% Bank financing even better is that he could house his entire family in the motel for free while they work to run (39:35) the business and if the business flopped Papa Patel knew that he and his wife could always go back to working overtime to save up enough money and just try again this was a classic dundo bat with a low risk and a very high reward with just a few thousand down payment the Batel bought the motel and saved on all their expenses since they didn't need to hire anyone outside of the family that combined with their Frugal lifestyle enabled the Mot PS to become quickly profitable as you can imagine the patels never lost their work ethic or caution (40:03) and oversaw a disciplined expansion across the country as they snapped up everything from motels to gas stations convenience stores and even luxury hotels the patels were a lowcost producer and they undercut competitors with prices that more commercial operations could hardly fathom charging work ethic business savviness and a bias toward dramatic action when the odds are massively in your favor is the epitome of dundo P's Own dundo Story came from launching trte a software business when he was 25 years old with just $30,000 in (40:33) retirement savings and $70,000 in max credit card limits that he could tap into as needed PAB dug into bankruptcy law in the US and realized that if his business fails he could just declare bankruptcy and essentially start from scratch again so he felt like he didn't have much to lose while the upside was that he could become independently wealthy while PAB worked his job during the day before and afterwards he worked on building his company and put his paycheck toward over head expenses once his startup reached $200,000 per year in (41:01) Revenue he quit his day job the worst case in his view was that he might lose $30,000 in savings and a job he didn't really care about but that was all since he had no wife or family to support in the best case scenario the idea might make him a millionaire which it did P's model for making dundo bets distills down to investing in simple existing businesses where there's low risk but High uncertainty for example with the motels they were lowrisk in that the patels personally had little to lose but also because Matel were not likely to be (41:32) phased out of existence there was just a recession that created a cloud of uncertainty over the business which if anything created an opportunity for patient investors like the patels even better if you can snap up distressed assets where the seller is being forced to sell because of a bank for closing on them to be dundo is to always have an eye open for dundo investment opportunities and betting heavily when the upside significantly outweighs the downside in his own way Papa Patel was a cloner like Ry rather than try and (41:59) launch the next hot tech company and create some disruptive innovation Papa Patel embraced the business model that he knew was proven to work did so at distress prices and then built a lowcost moat by being able to profitably afford rates that none of his competitors could while no one knew when the recession would end that was hurting Matel businesses Papa Matel knew as a question of when not if and that uncertainty gave him the cover to buy and build a business at a cost that he would otherwise never be able to do so at the (42:27) example with the patels really resonates with me because I know I personally spend a lot of time looking at businesses to own in public markets when there are probably so many wonderful privately owned businesses that I could acquire and operate myself or hire someone else to operate I also appreciate the personal elements being factored into dundo risk taking here as in p felt he had nothing to lose with transc because he was young didn't have that much money and had no one depending on him so of course he could afford to (42:53) take what looks like a big risk because it wasn't really that big of a risk same with the while popup Hotel did have dependence they were already very poor and they were accustomed to living that way so losing all their savings and a failed Motel business wasn't really as big of a risk as it might seem on paper but obviously the upside has been higher than I'm sure they could have ever dreamed a dundo mindset in my opinion is about not only pursuing high reward bets but also bringing a financial and personal perspective to your risk (43:20) tolerance if the patels lived stable middle class lives they probably wouldn't have jumped on the opportunity to buy a motel business and if PAB had a wife and kids depending on him he might have just kept his day job it's not that you can't chase big opportunities if you have a family it's just that you have more at stake and that needs to be factored into your risk reward calculations the dundo investor is a pretty easy to read book but it touches on the nuances of risk and reward in a way that few other books capture with (43:48) that said I want to begin wrapping up today's episode Manish p is a uniquely eccentric independent thinker devoted to being as pragmatic as possible his Common Sense approach to investing takes cloning to the extreme yet that cloning has worked out wonderfully for him and enabled him to build relationships with the very people he cloned like Warren Buffett and Charlie Munger P Bri is one of my favorite investors to listen to because he really does tell the best stories someone who has spent so much time hanging out with Charlie Munger (44:15) naturally has some interesting things to say we haven't really touched on it today but what's also great about B is not only his Devotion to teaching others but also his Devotion to charitable work his charity in India is called dakshana and his many lives for the better if you're curious to learn more about it I'll link to it in the show notes but Bri reminds me that investing is a game and to win at it we should learn as much as possible from the best players of that game and after spending many years carefully studying others he too became (44:43) one of the best players at the game of investing who ironically I am now studying he also reminds me that investing should be fun as I said it's a game and one we choose to play if picking individual stocks is stressful or overwhelming for you then don't do it just go buy an index fund PAB and others like him get immense Joy from trying to stack the odds in their favor and win more than anyone else and investing and that's why he'd be happy to do it even if it wasn't for money whether it's in investing or something else P's most (45:13) important lesson for us all is to go and find that thing we're so passionate about we continue doing it even if we won the lottery tomorrow because again it's not about the money to put a bow on this conversation about Manish PAB today let me leave you with one of my favorite quotes from him he says the following you don't make money when you buy stocks and you don't make money when you sell stocks you make money by waiting that's all for today folks I hope you have the patience to embrace your inner dundo investor I'll see you again next week (45:42) hey guys this is your Millennial investing host Shan Ali when I first started learning as a value investor I had no idea what direction to go in there's just so much to try and wrap your head around but it's never too late to get smarter about Stock Investing from the ground up after spending years interviewing and studying the best stock investors as a company at the investors podcast Network I've worked to distill those learnings into a simple course for you why did I do that so I can help you master the principles of excellent (46:12) lifelong investing I was a fan of the investors podcast for years before I joined the team and I always wanted a course that broke down the most important insights from a decade of interviews with leading investors the course is great for both beginners and pros from study studing what the Legends actually do to small practical ways to build your wealth over time I'll take you through 10 different sections covering the basics of what a stock actually is and how stock markets work to strategies to optimize your (46:40) retirement savings picking great companies what to look for in ETFs how much you should invest and how to monitor your Investments plus so much more by the time you're done you'll be ready to invest in the stock market learning plenty of tricks from the pros along the way to access the course and begin learning how to invest like the Legends just visit thinest podcast. (47:01) com getstarted with stocks that's the investors podcast.com slet started with stocks and for a limited time you can use code mi15 for a 15% discount at checkout that's mi15 when checking out as Buffett once said I want to have my cake and eat it too I like quality businesses I like great Capital allocation I like high Returns on Capital but I demand value finding great Compounders over time is namely a question of correctly identifying business quality and price can be used as a hedge against whether you're able to do that correctly if you (47:37) buy a company you think is a highquality compounder based both on its track record and opportunities looking forward and you can buy it near it's F of twoe low you're probably going to come out okay on the investment even if its Returns on Capital going forward are considerably lower than expected you may or may not earn a market beating profit on it but you'll at least have a decent company and you'll probably have paid a very re