Here are some of my takeaways from this wonderful talk given by superinvestor (value investor) Mohnish Pabrai last month (October 2016) to a classroom in China. Every minute of it is worth watching – it is both highly instructional as well as funny at times, and provides clues for why most active managers underperform/fail or burn out.
Five categories of businesses value investors should look for:
1. Tailwind + idiots can run it
2. Tailwind but need good management to run it
3. Low risk + high uncertainty
4. Special situations
5. Upside without downside – play the bubble
Most important skill that value investors need to have = extreme patience
Other successful tricks and philosophies:
1. Work around deceptiveness of the stock market by placing trades when market is closed
2. Lazy investor – never meet with management
3. Use superior analytics on commonly known information available through public sources
4. Don’t delegate investment research – do it yourself
5. It’s useful to have another occupation separate from investing, to help become a more patient investor
Disclosures and Disclaimer
