Navigating the investment landscape can be a daunting task. It's easy to feel like you're constantly making the wrong moves and not achieving your financial goals. This episode brings you the wisdom of legendary investor Mohnish Pabrai, who shares his insights on overcoming these hurdles and achieving success in investing.
Here's what you can expect from this episode:
By the end of this episode, you'll better understand how to navigate the investment landscape and make more informed decisions. So, tune in, take notes, and let's embark on this journey to financial growth together.
Don't forget to share this episode with your friends and colleagues who might find it useful. And if you enjoyed this episode, please leave us a review. Your feedback helps us improve and reach more people like you.
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Navigating the investment landscape can be a daunting task. It's easy to feel like you're constantly making the wrong moves and not achieving your financial goals. This episode brings you the wisdom of legendary investor Mohnish Pabrai, who shares his insights on overcoming these hurdles and achieving success in investing.
Here's what you can expect from this episode:
By the end of this episode, you'll better understand how to navigate the investment landscape and make more informed decisions. So, tune in, take notes, and let's embark on this journey to financial growth together.
Don't forget to share this episode with your friends and colleagues who might find it useful. And if you enjoyed this episode, please leave us a review. Your feedback helps us improve and reach more people like you.
Youtube
Join the Podcast Newsletter: Link
0:00
here is a question for you are you
0:03
struggling to become a successful
0:05
investor do you feel like you keep
0:08
making the wrong moves in the market
0:10
over and over again yeah that's a that's
0:13
a great question stick and it's really
0:15
difficult to do and I think
0:17
most of us are definitely myself we fail
0:20
at it so yeah I mean our brains you know
0:24
they've evolved over the Millennia and
0:27
they are not optimized
0:28
or being great investors if so you are
0:32
not alone many aspiring investors face
0:37
these challenges so one
0:40
we're gonna make a lot of mistakes
0:42
two this is a very forgiving business
0:45
you can be wrong even 98 of the time
0:49
still come out smelling really nice
0:51
that's why I have compiled insights from
0:54
legendary investor monish paplay who
0:58
shares his wisdom on how to overcome
1:01
these hurdles and Achieve success in
1:04
investing and if you want to have you
1:07
know great deep relationships
1:09
great friendships
1:11
then again that that same thing is
1:14
really important I think your
1:16
your friends need to know
1:19
that you've got their back and that
1:23
when they come to you they're going to
1:25
get very authentic answers even if those
1:28
answers are not what they want to hear
1:30
the clips are from a podcast episode
1:33
produced by the investors podcast
1:35
Network in their podcast we study
1:38
billionaires
1:40
you find here the link to the podcast
1:43
episode and also in description below of
1:46
this video enjoy the show and this clip
1:51
monish papri discusses the challenges
1:53
our brains pose in becoming great
1:56
investors and how understanding our
1:58
cognitive buyers can help us overcome
2:01
them
2:02
yeah that's a that's a great question
2:04
stick and it's really difficult to do
2:06
and I think
2:07
most of us definitely myself we fail at
2:10
it so yeah I mean our brains you know
2:14
they've evolved over the Millennia and
2:17
they are not optimized
2:18
for being great investors they were
2:21
really a brain with optimize to help us
2:23
survive
2:24
and surviving on the African Savannah
2:26
needed a certain type of wiring and we
2:29
need a different kind of wiring to be
2:31
great investors so our brains have a lot
2:33
of quirks and a lot of biases and I
2:37
would say reading monger's essay and
2:41
reading cialdini's book is going to be
2:43
helpful in at least being aware of the
2:46
pitfalls but we are susceptible to it
2:49
you know the commitment and consistency
2:51
biases a number of the biases that come
2:54
in and that are very much part and
2:57
parcel of who we are it's just part of
3:00
who we are the best that we can do is
3:02
try to be aware of it
3:05
and try to sidestep
3:09
as many of the pitfalls as you can but I
3:12
don't think anyone has succeeded in
3:14
sidestepping
3:15
all the pitfalls so yeah I mean I think
3:18
that's a great essay and it is helpful
3:20
it's helpful to reread it and it's
3:24
helpful to be aware
3:27
that we are quirky living creatures with
3:32
quirky brains which don't necessarily
3:36
follow a you know rational path all the
3:38
time
3:39
after watching that clip it's clear that
3:41
recognizing and overcoming our cognitive
3:44
biases is crucial for success in
3:47
investing
3:49
now let's hear from monish on the
3:52
importance of patience and holding on to
3:56
great businesses for the long term
4:01
this one we're going to make a lot of
4:04
mistakes
4:05
two this is a very forgiving business
4:08
you can be wrong even 98 of the time
4:12
still come out smelling really nice
4:14
and three
4:16
that is only going to happen
4:19
if you are able to buy businesses with
4:24
great economics
4:26
at reasonable valuations
4:28
and then hang on to them forever so when
4:31
they get fully priced they don't get
4:33
sold
4:34
when they get overpriced they don't get
4:37
sold
4:38
it's only possibly when they get
4:40
completely ridiculously egregiously
4:43
overpriced that you can consider selling
4:46
and so this framework of circle the
4:50
wagons
4:51
is very fundamental
4:54
I think it's very hard to beat the
4:55
market if you don't have this framework
4:57
because you're going to be
4:59
cutting the flowers
5:01
and watering the weeds and what we need
5:04
to do is make sure we don't cut the
5:06
flowers and it really doesn't matter
5:08
whether you water the weeds or not but
5:09
the important thing is you just don't
5:11
cut the flowers it's okay if you want to
5:13
water the weeds
5:15
as monish explained successful investing
5:18
requires a long-term approach and a
5:21
willingness to hold on to great
5:23
businesses
5:24
in this next clip monish shares his
5:28
thoughts on lifelong learning and how it
5:30
contributes to becoming a better
5:32
investor well I very much enjoy the game
5:37
and one of the things with this
5:39
particular game it's actually very
5:41
similar to bridge
5:42
is that you know Bridge is a game that
5:45
would take you 15 minutes to learn
5:48
and you cannot Master it in a lifetime
5:50
so you can keep learning forever there's
5:53
really no Plateau that shows up in
5:56
Bridge even if you're playing 30 40
5:58
hours a week for your whole life you
6:01
would still be learning and I think
6:03
investing is very similar in the sense
6:05
that this is a game with a lot of twists
6:08
and turns and anytime you look at a
6:12
business
6:13
the my rate of factors that affect where
6:16
it might be in the long run
6:18
are so diverse and some of them you may
6:21
be able to understand some of them may
6:23
be within your circle of competence
6:25
a lot of them may not be so you know
6:27
lifelong learning
6:29
is going to serve you very well so I
6:31
think I am as excited
6:33
about the investing game as I was nearly
6:37
30 years ago but I think what has
6:40
happened in the previous almost three
6:43
decades is that more competency has been
6:46
built up uh more mental models have been
6:49
refined and Incorporated and so
6:54
the pattern recognition
6:57
is probably faster
6:59
now than it used to be and it's broader
7:02
now than it used to be
7:05
continually learning is key to staying
7:08
ahead in the investing game as monish
7:11
demonstrated next we will hear monish
7:15
talk about the importance of recognizing
7:18
mistakes and learning from them in
7:21
investing
7:22
yeah so you know we have to separate the
7:25
signal from the noise
7:27
as we saw with these examples of the
7:29
nifty 50 and
7:31
naspers and Buffett and so on is this is
7:35
a business with a high error rate
7:37
even the best investors will be wrong at
7:40
least half the time
7:41
and so one of the backdrops we have to
7:44
keep in mind is that if you have a
7:46
portfolio of 10 stocks
7:48
more than likely half are mistakes now
7:51
you may not lose money on them they may
7:53
not just compound at a high rate they
7:55
may you know
7:56
be four percent compounding instead of
7:58
15 that you're expecting for example
8:01
so knowing that there's a high error
8:04
rate and
8:06
separating the signal from the noise
8:10
when you have a good amount of data
8:13
telling you
8:14
that the signal is saying that you were
8:17
probably wrong
8:19
then yeah you
8:21
you cut your losses then you move on
8:24
acknowledging and learning from our
8:26
mistakes is a vital part of becoming a
8:29
successful investor now let's see what
8:31
monish has to say about the significance
8:34
of Truth and authenticity in building
8:37
trust and strong relationships
8:41
yeah well I think that's a great
8:42
question it is going to feel
8:45
uncomfortable
8:46
I think that it is the small white lies
8:51
are just very comfortable you know you
8:53
don't you don't hurt anyone and
8:56
why would anyone care and how is anyone
8:58
ever gonna know that you really thought
9:01
it didn't look great you know you know
9:02
so you move on but it's not authentic
9:05
and I think that many times when we meet
9:08
people
9:09
we don't know why
9:12
but we sometimes just don't want to be
9:15
around certain people we can't put a
9:17
finger on it and it may be that there's
9:19
too much implicit and explicit lies
9:23
around what that person is saying or
9:25
doing
9:26
so I think that the inversion of that is
9:29
that if you want to build trust
9:32
you have to make a commitment
9:35
to the truth
9:37
and the truth is going to not be easy
9:42
many times
9:44
but I think that once you kind of cross
9:47
that Rubicon and you know are on the
9:49
other side what you're going to find is
9:52
that trust goes up a lot
9:55
and basically this world functions on
9:58
trust
9:59
it doesn't function on contracts the
10:03
best contracts are ones that you never
10:04
look at after you sign them
10:06
I think that if you if you want to have
10:10
a lot of success in business
10:12
you have to have a very high standard
10:15
for Candor and integrity
10:17
and if you want to have you know great
10:19
deep relationships
10:21
great friendships
10:23
then again that that same thing is
10:26
really important I think your
10:28
friends need to know
10:31
that you've got their back and that
10:35
when they come to you they're going to
10:38
get very authentic answers even if those
10:41
answers are not what they want to hear
10:44
and so those are I think these are these
10:47
are very powerful principles where
10:50
once you gonna get comfortable with it
10:53
and start to apply it in your life
10:56
the paybacks are so enormous that it
10:59
just becomes a no-brainer I think any
11:01
other way of living
11:03
it's kind of dumb and it's going to make
11:05
your life
11:07
a lot more pleasant
11:09
you know it's very easy when you don't
11:12
lie because you don't have to remember
11:13
your lies
11:15
you know this makes it really simple
11:17
anytime you're saying something or
11:19
talking about something you don't have
11:22
to remember oh I said this and I said
11:24
that and I got to keep consistent with
11:25
that or any of that just say the truth
11:28
you know and and that's the end
11:31
trust and authenticity are essential for
11:36
Success both your business and personal
11:38
relationships finally monish shares his
11:42
perspective on the importance of openly
11:45
discussing financial matters
11:47
yeah so actually what what I have found
11:50
is that you know your remarks about
11:52
people don't like to talk about money I
11:55
think that is universal across cultures
11:59
you know guy always gets a chuckle
12:03
because many times he and I
12:05
will be in a conversation with someone
12:09
who's having has some
12:13
important issues folk in the road trying
12:16
to figure out what to do you know I'll
12:19
be asking a bunch of questions to try to
12:21
get
12:22
the data to try to help the person and
12:25
one of the first questions
12:27
will go to really understand in detail
12:30
the financial situation you know what's
12:32
the network what's the income what's the
12:34
expense and all that and guy always kind
12:36
of goes into a cubby who'll say oh there
12:38
we go again she's asking all these
12:39
uncomfortable questions you know and and
12:42
when he's he's now learned that monish
12:45
is going to ask those questions
12:47
okay and and what I find surprising is
12:52
the people who hear those questions who
12:55
have never answered those questions to
12:58
anyone
12:59
openly give the answer
13:02
and then they say I want to let you know
13:04
I have never discussed this with anyone
13:06
no one knows this please don't I said
13:09
it's all confidential we're not going to
13:11
talk about it to anybody but people
13:14
actually get relieved
13:17
to be able to share the data I recently
13:19
I had a call with a friend who wanted
13:21
advice career advice you know and he's
13:25
at an age where he could retire or he
13:27
could take job a or Joby or whatever and
13:30
one of the first things I asked him is I
13:32
I needed to know his financial situation
13:34
before I could tell him what made sense
13:37
for him you know and so he shared his
13:41
information that he's never shared with
13:43
anyone you know other than his wife had
13:45
never talked about it I don't think his
13:47
kids are aware of it but that gave me
13:50
the information to be able to be most
13:53
helpful to him and also I think he felt
13:56
relieved that he was not having a
13:58
conversation around eggshells you know
14:02
where I'm in a vacuum you know trying to
14:04
say well if this is your situation then
14:07
do this I actually knew exactly what a
14:09
situation was and I could tell him what
14:11
I would do in that situation so yeah I
14:13
mean I think I think people don't like
14:16
to talk about money but many times when
14:17
they are confronting different issues
14:20
those conversations can be very
14:23
Enlighten the Lord for them and I think
14:26
it's important
14:28
that in a safe and confidential
14:31
environment
14:32
with the people near you when you're
14:35
trying to you know help them with some
14:37
things where that information would be
14:39
relevant that go there you go to the the
14:42
land you're not supposed to go to that's
14:44
okay open and honest discussions about
14:48
finances can lead to better decision
14:50
making and overall Financial well-being
14:53
I hope you found these insights from
14:57
monish popular valuable in your journey
15:00
to become a successful investor if you
15:02
want to hear more insights from Manish
15:05
papri you'll find a link to the full
15:07
podcast episode from the investors
15:10
podcast Network who produces
15:13
we study billionaires in the description
15:16
below remember to like share and
15:19
subscribe for more content like this
15:22
good luck and may your Investments
15:25
prosper