There is no such thing as a value trap. There are investing mistakes. Mohnish Pabrai More Quotes by Mohnish Pabrai More Quotes From Mohnish Pabrai Mistakes are the best teachers. One does not learn from success. It is desirable to learn vicariously from other people's failures, but it gets much more firmly seared in when they are your own. Mohnish Pabrai mistake teacher people You don’t make money when you buy stocks. And you don’t make money when you sell stocks. You make money by waiting. Mohnish Pabrai sells making-money waiting Wall Street sometimes gets confused between risk and uncertainty, and you can profit handsomely from that confusion. The low-risk, high-uncertainty [situation] gives us our most sought after coin-toss odds. Heads, I win; tails, I don't lose much. Mohnish Pabrai confused wall winning Heads I win, tails I don’t lose much. Mohnish Pabrai loses winning tails The only way one should buy stocks is if you understand the underlying business. You stay within the circle of competence. You buy businesses you understand. Mohnish Pabrai circles should way Warren Buffett has said many times that people either get value investing in five minutes or they won't get it in five years. So, there is something in the human brain, that for some of us, makes all the difference in the world right away and the patience it requires is part of the wiring process. Mohnish Pabrai differences people years We Americans love original ideas. But truly, there are already plenty of good ones out there, ours for the taking. If I were too proud to copy the ideas of others, I likely wouldnt have even a fraction of my current success. Mohnish Pabrai fractions proud ideas The good news in investing is there are no HR problems. If there are no humans, there are no problems! Mohnish Pabrai investing news problem People see poverty all around them in India, but they are desensitized or immune to it. I came to the conclusion that poverty is driven by lack of education. Mohnish Pabrai poverty india people I have a hard time getting past the day without the nap, so the nap is a must. Mohnish Pabrai hard-times naps past Entrepreneurs are great at dealing with uncertainty and also very good at minimizing risk. That's the classic great entrepreneur. Mohnish Pabrai classic entrepreneur risk Basically if you study entrepreneurs, there is a misnomer: People think that entrepreneurs take risk, and they get rewarded because they take risk. In reality entrepreneurs do everything they can to minimize risk. They are not interested in taking risk. They want free lunches and they go after free lunches. Mohnish Pabrai lunch reality thinking The problem most nonprofits have is that they are run by romantics who are great to hang out with, but they have no clue. Mohnish Pabrai nonprofits problem running Talking to people is beneficial if you can identify the right people to share ideas and discuss decisions because everyone has blind spots, and others can sometimes catch yours. I think an investment team is a bad idea, but it is a good idea to talk to trustworthy individuals who do not have biases or interests. Mohnish Pabrai good you team people We have to do what I would call anomalies: we have to look for strange things that show up once in a while. They don't show up all the time. We have to be scanning the horizon, and doing that, once in a while something will show up that makes a lot of sense, and then you act on it. Mohnish Pabrai look you strange time The essence of a good investment manager is one who studies a given business and extrapolates the future cash flows that the business is likely to generate over the next several years. Based on the cash flow and asset assessment, they can then arrive at their expected rate of return if they bought a fraction of that business at a given price. Mohnish Pabrai good investment future business I own a company called Rain Industries. Mohnish Pabrai industries own company rain I think a lot of people are getting more serious about how to do the most good, but there is no road map. I'm hoping I can offer an example. Mohnish Pabrai road good serious people One of the first things I tell people is, if you want to learn about investing, you want to open an account and make real investments because that's when it becomes real. Mohnish Pabrai you real want people What is John Arriaga's circle of competence? Is it real estate? No! Is it U.S. real estate? No! Is it California real estate? No! Northern California real estate? No! Only real estate around Stanford. His circle of competence is this small. Mohnish Pabrai real-estate circle small real
