Mohnish Pabrai: How to Earn 26% Returns Per Year (feat Chuck Akre) | Multibagger Investment Strategy
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- Опубликовано: 22 май 2024
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Want to know Mohnish Pabrai's Investment Strategy? In this video, I react to one of Mohnish Pabrai's recent Q&A interviews where he shared his thoughts on the different styles of Value Investing, including which strategy he thinks is best. We also dissect the Multibagger Framework of Chuck Akre, known as the 3 Legged Stool and we look at examples of businesses that have been huge multibaggers over the last 50+years. Full Mohnish Pabrai interviews will be linked below if you're interested!
• Mohnish Pabrai's Sessi...
• Mohnish Pabrai’s Q&A S...
• 26 Is The Magic Number...
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Book List Below:
Richer, Wiser, Happier by William Green - amzn.to/3iCp8Pu
The Psychology of Money by Morgan Housel - amzn.to/3EYQuXC
The Dhando Investor by Mohnish Pabrai - amzn.to/3ulAqtM
Rule 1 by Phil Town - amzn.to/3F3MJQJ
One Up on Wall St by Peter Lynch - amzn.to/3uoqCzo
The Intelligent Investor by Benjamin Graham - amzn.to/3F0kGkX
Influence by Robert Cialdini - amzn.to/3ulF2jJ
Poor Charlies Almanack: The Wit and Wisdom of Charles T Munger - amzn.to/3B3UbKg
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Artwork: Thumbnail+Background by Canva www.canva.com/
Footage Courtesy of Mohnish Pabrai, Coca Cola, McDonalds
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Disclaimer: I am not a financial advisor and these videos are for entertainment purposes only. Please do your own due diligence before making any investing decisions. Investing IQ is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly
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Awesome video, glad I found this channel, subscribed!
Nice explanation and examples. Thank you for the video. Learned a lot today.
ESTE VIDEO TIENE MUY ALTO VALOR DIDACTICO. MUCHAS GRACIAS !
Hey, awesome video. Where can I find the video of Mohnish responding to stock tips that you mention? Thanks
Terrific video. Appreciate the content
Thank you! I'm glad you enjoyed it :)
Sounds much like Peter Lynch, who coined the term "multi-bagger." I think the key is moat, or more accurately, the first company to fill a huge consumer need that no one ever realized existed - but doing so with financials and management that ensure the moat is impossible to replicate. So the 3-leg stool is the support, but filling a large unmet need (or "moat") is the driving force. Lynch seemed to rely on common sense, just look around and see for yourself what companies people love that Wall Street hasn't yet noticed. Lynch could spot great moats with mere common sense (as you all can), while Buffett used complex mathematics to confirm if the moat is sustainable. Lynch-Buffett would have been a mega partnership.
Nice work bro. Ty
Thank you for watching! :)
I just subbed because I love content on Mohnish Pabrai 😂🎉
Wow!! I thought you would have hundreds of thousands subscribers because the quality is awesome! Found your channel today and instantly became a fan of your production. Keep it coming!!
Wow, thank you so much for the kind words :) I'm really glad you enjoyed it!
@@investingiq Hi Investing IQ. Since hedge funds manage millions/billions how do they mitigate against the risk of loosing their capital if a broker they use goes bust? They arent covered definitely for millions/billions but only for a few thousands
Super..iam subscribed your channel.. your videos are excellent..
Thank you so much!
thank you for the gold nugget
Thank you for watching! :)
No one can predict. One important thing no one talks about is that if you have a capacity to buy a percentage of a company, opportunities come to you. They don't spend time on youtube or CNBC to get ideas.
That limiter/gate was chaos on that audio processing . Yikes. Turn off the audio enhancements.
Keep making videos like this and in 1 year you will have 30000 subscribers!
Thank you so much! :)
I've read that Pabrai's license plate is "COMLB 26", so he's been aiming for this for a while. 26% is also a double in three years. The problem is of course to find a compounder at the right stage. While listening to the video I looked at the examples he listed of McDonald's, Was Mart, and Coca Cola, and they have not been anywhere near 26% for the last 10 years. Visa and Mastercard on the other hand, is close. But how can we know that we should pick those companies, over the other companies? This is where the skill goes. It is easier said than done, for sure.
Hey mate! Yeah absolutely, it's way harder than it sounds.. yeah, I mean there's probably better examples he could have used, like Costco, Berkshire, Amazon (basically Nick Sleeps portfolio lol), and more recently with Google, FB, Microsoft etc.
I think he might have used McDonalds because of all the competition they faced, yet it was still a multibagger because of the business quality and runway.
And with those businesses, if one was an investor back then and paying attention, it might have been obvious that it had a huge runway to keep compounding. Although that could be hindsight bias... I think the overall point he was making is great, in terms of what to look for and what those businesses had going for them, and we can apply it to businesses today. I mean, you've already sort of done it with Tesla. You caught that compounder pretty early and I imagine you believed it was obvious that Tesla would do what it's done over the last 5years and going into the future. I think it's also harder now than back then because theres more information out there and more investors are looking for great businesses. As soon as a moat or runway becomes well known as Mohnish said, like Nvidia and Tesla, the multiples get very large...
And I also find it hard looking at really small companies because it's so hard to know which ones will succeed and 100x.. I guess I'll know when I see it because it will be obvious (hopefully)
Its hard to know which ones to pick over others. Maybe its just a feeling. Maybe the fundamentals and runway are really obvious. How did you feel when you looked at Tesla a few years ago?
When I think back to past, before I was investing, I remember when Google started getting really popular back in the day, same with Microsoft operating system, and with Facebook in my teens. Again, this could be hindsight bias but I feel like if I was an investor back then, it would have been obvious that it's going to the moon. But even Buffett missed Google so I dont know lol.
All we can do it try, and discuss our ideas with eachother :)
@@investingiq Yes. I think both Google and Apple were obvious. I did not invest in them then, but I kept saying that I should've, but always thought I was too late. (In hindsight, it was not too late) Then when Tesla came, I did not want to make the same mistake. I think the key is to find a company you like, and then do serious research and follow it closely. You need to understand it thoroughly to be able to hold it in the drawdowns. One insight of the study 100-baggers, is that to be able to hold a 100-bagger you usually would need to suffer drawdowns of 30-50% or even more over the years. That is hard if you don't know very well what you're owing, and are able to discern serious problems in the business from temporary and manageable situations.
Yea this guy says what Buffet says also. But if I bought these coke, Walmart etc will they give 26% over the next few years? What are the other stocks which he thinks will give that and which are not at the end of the runway
@@houseman573 that's the million dollar question haha. It's up to you to find them :)
No probably not regarding Coke, Walmart. They're just past examples we can learn from.
A moment of silence for folks who invested in BAB hearing to him
Can anyone tell me whose statue is in the background?
Charlie M
He's saying that the best strategy is to buy stocks that go up 100x... wow, what a discovery! My cat could tell me that too...
I think you missed the point. Lots of wisdom in the linked videos.
What Monish said between 3:40 and 4:53 is really confusing to me. I know he is considered a value investor, but I am fairly certain that Benjamin Graham, Charlie Munger and Warren Buffett all would disagree with what was said. The decision to keep an investment is nearly the same decision as making an investment. There are two differences that separates the two, taxes and uncertainty about value, since you never know the value down to the dollar.
Holding on to an overvalued stock when you know it is overvalued is similar to buying an overvalued stock, pure speculation.
An investor that is certain that the value of a business is less than it is value at would never hold on to the stock. Because if you are certain of the overvaluation, there is no way for you to lose.
This is what can happen:
Scenario A:
The stock price falls back to a point that is below intrinsic value and you buy.
Scenario B:
The stock doesn’t fall below intrinsic value ever, but never gives a satisfactory return.
No matter what happens you will never achieve a good return by holding on to a stock that you know is overvalued, unless you attempt to time the market by waiting for it to become more overvalued. An investor doesn’t try to play that game.
Why did Charlie hold Costco all these years when it became expensive? I suggest reading Charlie and Warren more in their later years because what you're describing is a pure Grahamian approach.
That black and white way of looking at stocks and valuations is what Mohnish is trying to reprogram in us, because a lot of investors are still hardwired with Grahams principles of buy below intrinsic value and sell above intrinsic value. Finger wagging and saying its speculation is close minded. It's not speculation.
Theres nothing wrong with the style you're describing - it's just the Ben Graham approach and used by the likes of Michael Burry. Buffett and Munger use a different approach, at least when it comes to selling businesses. Of course the principle of buying cheap is still sound advice, even when one is buying high quality businesses :)
@@investingiq I’d have to disagree. Warren Buffett has said himself that he is 100% Benjamin Graham, but that what Benjamin Graham failed to do was to realize the power of a great business.
Holding on to an overvalued stock is speculation, because the only way to achieve a good return is by having someone pay an even more expensive price.
Warren Buffet and Charlie Munger look at value this way: There is a very wide range, which can be called intrinsic value. If you think a stock is trading significantly below intrinsic value, buy. If you think the stock is trading above intrinsic value, sell. If you find a better opportunity, sell and buy the better opportunity.
The reason why Charlie never sold Costco is because he thought that it was still within the intrinsic value range. I wouldn’t disagree either. Costco could very well give a 6%-9% long term return from this price point. Berkshire has sold Costco on the other hand. Other future multi baggers that have been sold are IBM, Deere & Co and Walmart. These have been sold because Warren was sure that they were priced above intrinsic value.
If Costco doubled tomorrow Charlie likely wouldn’t sell either. The reason why is probably because he loves the company, has connections with the people there and wouldn’t want to jeopardize it for money.
@@drdrjr13 you are wrong about Buffet and Munger at this point in time.
Buffet in his younger years was pure Graham, but when he met Munger he essentially modified his investing style to holding great businesses forever. It was Munger who said ‘better to own a great company at fair value than a fair company at great value.’ And both Buffet/Munger have said their favourite holding period is ‘forever.’ Both these ideas are very anti-Graham.
If you look at their top holdings they have changed minimally over the years despite huge fluctuations in price (yes into overvalued territory - apple, bac, amex, ko etc.).
That’s not to knock Graham - Burry for example is pure Graham and he’s done very well.
You make an excellent point that exposes what appears to be an inconsistency in the approach that Warren Buffett and Charlie Munger take. The decision to hold a stock you believe is overvalued is EXACTLY the same as the decision to buy a stock you believe is overvalued, except of course for the capital gains tax consequences. In either case, Mr. Market allows you to choose the stock or the money. It doesn't make sense to choose the money in one case (not buying) and the stock in the other case (not selling). The unrealized profit you have in a stock should not influence the decision. It is history. Also, the potential future loss (against which they want a margin of safety for new purchases), is the same loss they are willing to risk for all the stocks they hold! However, I will take issue with your statements about knowing with certainty that a stock is overvalued. You don't know the future and you don't know what the actual growth rate will be, thus, your intrinsic value calculation is no more than an educated guess at an unknowable number.
26% is too much, even warren buffet over his life time is just 20%.
He talks a good game. Bit you watch his moves and monitor his returns...hes a lot less impressive
From what i have heard he started with 1 million usd in 1996. Now he has 240 million portfolio in US, 120 million portfolio in India. In an interview he was saying he has a 7 million invested in a company named reysas logistic in Turkey which turned 10 bagger. In the same interview he mentioned he holds 2 more companies in Turkey.
Not impressive? Can you expand on that?
Ignorance to confirm your bias and not consider a personal friend and student of Charlie Munger and Warren Buffet who is quite literally having an investment philosophy that has stood the test of time and has been developed since Benjamin Graham 😂
Nice haircut