Summary of #83Mohnish Pabrai - Value Investing, Great Compounders, Lessons from Warren Buffett & Charlie Munger

00:00:00 - 00:55:00

In the video, Monish Pabrai discusses how he made the switch from being a deep value investor to focusing more on great compounders. He talks about how to identify valuable companies, the dangers of being over leveraged, and how to deal with mentally processing a business. He also discusses how competition is for losers and how to find businesses with high returns on invested capital.

• 00:00:00 Monish Pabrai is a legendary investor and philanthropist who has taught many lessons about investing and entrepreneurship. He discusses the Dunning-Kruger Effect, how startups should minimize risk, and how the Patel family's approach to the motel business is a good model for other entrepreneurs.
• 00:05:00 Mohnish Pabrai relates his journey from being a deep value investor to more recent teachings on 2020 and 2021 being years of enlightenment in investing. He discusses how he made the switch to being more focused on great compounders and why this is the best place to invest.
• 00:10:00 Mohnish Pabrai discusses the importance of finding businesses with strong durability, growth, and prices, and how few businesses meet all of these criteria. He typically invests in 1-3 bets per year, and spends a limited amount of time on each. If a business does not meet his criteria, he quickly removes it from his portfolio.
• 00:15:00 Mohnish Pabrai discusses the importance of quickly identifying businesses with low P/E ratios, looking for businesses with a long history of success, and avoiding businesses with low margins or high competition.
• 00:20:00 Mohnish Pabrai discusses the importance of value investing, the dangers of being over leveraged, and how to identify valuable companies. He also talks about how to deal with mentally processing a business, and how long it can take for a good investment to pay off.
• 00:25:00 Mohnish Pabrai discusses the two big mistakes that investors make: being too cheap and not being patient. He advises investors to focus on businesses that are truly exceptional and to understand them before investing. Pabrai also recommends writing down lessons learned and using Parkinson's Law and Pareto's Law to be more productive.
• 00:30:00 Mohnish Pabrai discusses how competition is for losers, and how it is important to find great compounders, or businesses with high returns on invested capital. This reminds him of the venture capital and private equity industry, which is dominated by companies that are able to consistently increase their profits.
• 00:35:00 Mohnish Pabrai discusses the differences between investing in the public and private markets, and how venture capitalists have to have a very good deal flow and understanding of the business to invest in it. He also discusses the lack of trademarks in the venture business, which can make it difficult to make a good decision.
• 00:40:00 Munger and Buffett recommend that investors focus on compound growth, not necessarily making immediate profits. Munger also recommends that investors be like "putty" – allowing themselves to be passive and watch investments grow without interfering. This lesson can be applied to all areas of life, including finances.
• 00:45:00 Mohnish Pabrai discusses the idea that one's deepest desires are one's destiny, and how one can achieve this through following great entrepreneurs. He also discusses the importance of wisdom in ancient texts, and how it can be applied to life today.
• 00:50:00 The video discusses how Mohnish Pabrai, who was 35 years old at the time, discovered his passion in life and found success thereafter by following his own instincts and interests. He advises others to do the same by journaling or consulting with professionals to figure out their deepest desires.
• 00:55:00 Monish Pabrai, a financial advisor, discusses value investing and how it can be applied to the stock market. He also discusses the principles behind Warren Buffett and Charlie Munger's investment strategy. Finally, he provides listeners with information about a retreat he is participating in.