In 2000 one of the early employees of Microsoft joined his fund. Valuations and price multiples were so high that the earnings growth wasn’t enough when the multiples contracted. The last 4 years it has gone back to returning 20% a year. The market went up 20% a year on average from 1980-2000 and then returned 0% overall from 2000-2016. Contemplating your navel with noting to do allows good things to happen. 2020 has been the 2 nd highest year of learning in his investing career. He forgot that he was supposed to switch back to the coffee can approach. At the time Mohnish didn’t care about the overall market and was focused on buying a dollar for 50 cents and selling when the 50 cents reached around 90 cents. Everything was moving from Berkshire to things like. In March of 2000 Berkshire hit a multi-year low. Mohnish Pabrai started his fund in 1999 and assumed that until 2016 we would be flat on the DOW and that headwinds were here. He also invested in CMGI in the US which was a 100 bagger as well. Mohnish put 10K in an Indian business and cashed out over 1M. During this time he captured two 100-baggers (stocks that increase 100 times the purchase price).
#Mohnish pabrai dhandho investor how to
He was around software in his IT business and new how to invest in tech companies. This was a completely new area for him, and he soaked up investing like a sponge. Mohnish Pabrai started investing in 1994 with only his personal money when he heard about Buffett. In 2000 Microsoft was the most valued company in the US, but had a trailing P/E of 70. In 1981-82 you could have bought many good businesses for very cheap, but soon after were very expensive. Human memory only goes back roughly 17 years which is the normal cycle of the boom and bust periods of the stock market. Pabrai bases his presentation and discussion around this topic and how he has changed his strategy over the years. She points out that there are long periods of 0% gains and then periods of booms in the market. Mohnish Pabrai opens up his lecture by recommending the book by Maggie Mahar titled ‘Bull: A history of the boom and bust, 1982-2004’. He currently has around half a billion under management and is paid only with performance fees. He was in the IT industry until 1999 when he sold it and started managing money. Mohnish Pabrai is the author of ‘The Dhandho Investor (The Low-Risk Value Method to High Returns)’ and founder of Pabrai Funds.
Read this as an abridged transcript more than a normal blog post. This will be more of a cliff notes version of the Lecture. There was a lot of great pearls of wisdom in the 2-hour presentation that I wanted to share with you. One of my all-time favorite investors, Mohnish Pabrai, gave a presentation and Q & A session to Boston College a few months back. We believe the end result of this strategy is likely to vastly underperform an alternate strategy of just sticking with the same simple, broadly diversified fund for the long haul.I decided to do something a little different for this blog post. Investors are prone to be misled by these ads and what they suggest, and as a result are inclined to keep switching among funds. But, as soon as the performance of that fund wanes, predictably enough, it is no longer promoted and instead another fund is pushed, the one that now has recent good performance.
Yet this is unfortunately how this industry typically functions.īy providing dozens of offerings and strategies, other investment shops are able to constantly promote a new "flavor of the month." In all likelihood, they promote the fund that has had recent great performance. We cannot understand how an investment house can be intellectually honest and have dozens of funds and offerings. We hope to never bring products to market that we believe are not world-class. Dhandho is likely to never offer more than a small number of investment vehicles. We do not believe that one needs to invest in dozens of funds to achieve one's investment goals.
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