[00:02:56] Mohnish Pabrai: Yeah, that sounds great to me. Give it a shot.

[00:02:59] Stig Brodersen: Alright, let’s see here how it goes. So the first question is, I’m going to make this comparison of relationships, friendships with stocks in the portfolio. And so we know that the best things in life comes from compounding. And so we want to circle the wagons of our current friendships, but you probably perhaps also want to be open to new wonderful relationships.

[00:03:25] Stig Brodersen: So assuming that you agree with that premise, how do you think about attracting the right people into your life and investing in these compound relationships, circling the wagons, but then also start new friendships?

[00:03:37] Mohnish Pabrai: Well, that’s easier said than done. So it’s a challenge in the sense that, I mean, if we were to do it, you know, let’s say the way MGA would recommend it, we know we’d be looking at opportunity costs, right?

[00:03:50] Mohnish Pabrai: And, you know, what we own versus what, might be possible to bring into the portfolio. One of the things to keep in mind is the mistress always appears to look better than the wife but she may actually not be better. Appearances can be deceiving. So we have to keep in mind that. Is this mistress really better? Or is the newness what is making it better? And that’s a challenge. And I think one way to think about it is, you know, buffet has talked about the permanent holdings, right? I mean, he talks about some companies that he would not want to sell clearly. Apple was not one of them. But you know, he has held American Express for a very long time.

[00:04:40] Mohnish Pabrai: He’s held Coca-Cola for a very long time. And the wholly owned businesses have all been held for a very long time. So I think that when I look at my portfolio, there is clearly, I would say, a hierarchy in the sense that like, if I look at the portfolio I have today, I like everything. If I didn’t like it, I would’ve made a change.

[00:05:05] Mohnish Pabrai: But I like everything. Now when something new comes in, you know, a new mistress shows up. Now if the mistress is truly attractive, then we can take a look at the lowest conviction ideas. And you know, I think one should not be playing a game of 19 verses 20. Like, you know, the wives are 19, the mistress are 20.

[00:05:26] Mohnish Pabrai: You know, that’s probably not a good game because you can be off on that. But if something in the portfolio is a six and a half out of 10 and the new kid on the block is nine and a half out of 10, then yeah, that should be a good candidate for considering a change. Now you have tax issues and other things, but you can think about it in, in those terms.

[00:05:46] Mohnish Pabrai: But I think that’s what makes investing very hard. So if we go back to the early 1970s, right, and the early 1970s, there was this concept, late sixties, early seventies, there was this concept of the nifty 50. And basically the idea was you bought these 50 happening blue chip stocks, 2% into each one, and you didn’t really care what the valuations were or anything.

[00:06:15] Mohnish Pabrai: You just bought them all and you kept them ignore all the noise. Now, what happened in 73, 74 is that was a crash in slow motion. It was a pretty big market correction. When you look at the peak of 73 to the bottom of 74, the nifty 50 got taken out, back and shot. It was a bloodbath. And by 1975, nobody would admit they were invested in the Nifty 50.

[00:06:46] Mohnish Pabrai: Now, there is some controversy whether Walmart was part of that nifty 50 or not. Some people think that Walmart has its IPO in 1970. Some people think that Walmart was one of the nifty 50. Now, just to make my case easier. We are going to assume Walmart was part of the Nifty 50. So let’s say you invested in the n Nifty 50.

[00:07:09] Mohnish Pabrai: You put a hundred thousand dollars into the nifty 50 and 2000 of a hundred thousand dollars went into Walmart, one of 50 bets. Now let’s also assume that the all the other 49 holdings go to zero. Now there were some real losers in there like Xerox and Polaroid and Kodak and IBM, et cetera, which actually IBM didn’t go to Zero, but some of the other guys did go to Zero.

[00:07:38] Mohnish Pabrai: But there was also a DP and Amex and Disney and all of these companies in there. I’m taking everything to zero except Walmart. So you have $2,000 that you put in. If you kept it invested for the last 55 years with 98% of the portfolio going to zero, your annualized returns. Are almost 15% a year, and you blew out the S&P 500 with a 98% error rate.

[00:08:11] Mohnish Pabrai: Okay, now to do that, one is you needed to recognize that Walmart was a beautiful wife, and no mistress was better than this beautiful wife, and you had to hang onto it, okay? And of course, in 1975, when the blood bat took place, everybody exited everything. Now, I also want to point out that when Walmart went public, Sam Walden already transferred shares to his kids.

[00:08:48] Mohnish Pabrai: When Walmart was a private company, he actually paid almost no estate tax because the shares were transferred. It was worth almost nothing. It has been 55 years since the Walmart IPO, and it has been 33 years since Sam Walton died. The Walton family today owns 46% of Walmart, okay? 55 years after the IPO.

[00:09:14] Mohnish Pabrai: You know, there were a lot of helpers that came to the Walton family saying, wish you should diversify and you should do this, and you should do that, and all these things. And they all, they told them all to get lost. They paid no taxes, they had no frictional costs. There has huge dividends and there’s a very strong message there.

[00:09:36] Mohnish Pabrai: And this is not some outlier example, you know, we’ve seen a lot of studies where most of the returns in the stock market come from a very small sliver of companies. Even Warren Buffet has like a three or 4% hit rate. So most of the time when we encounter a mistress, we are going to be disappointed. Okay? So we got to keep that in mind.

[00:10:02] Stig Brodersen: It’s wise words I get tempted to say, and if I sound wise, it’s wisdom born out of pain but wife is just next door. It’s going to sound, it’s going to sound terrible. She’s like [Inaudible] hearing me. Anyways, it takes me here to the next question because I’ve heard you being asked quite a few times from students, like what kind of advice would you give to someone who starts with a little money or who is 20 or 25? I would be curious to hear, cause I just turned 40 and I know last year you turned 60. If we look away from the whole wife and mistress thing if we can, which advice would you give to yourself age 40 and 50 whenever it comes to life. And why would they be different?

[00:10:41] Mohnish Pabrai: Stig, it’s all about compounding. There are three variables with compounding your starting capital, the rate of return, and the length of the runway. Now what we really need is a very long runway. A long runway is a marvelous thing. You know, Warren Buffet bought his first stock when he was 11 years old. He said, you know, he was wasting his time until then.

[00:11:12] Mohnish Pabrai: Okay but he bought his first talk when he was 11 years old. He’s going to be 95 this year. Okay? So 84 year runway and counting, which is great. So one of the things that I had assumed when I was 40 years old is that I was going to be leaving Planet Earth on June 11th, 2044, when I was 81 day short of my 80th birthday, and then recently.

[00:11:42] Mohnish Pabrai: I went to God, Google, and I asked God, Google, when am I leaving? And of course, when you ask God, Google, you’re going to get an answer. And God, Google said, you are going to be leaving on June 11th, 2054. So I got 10 more years. 10 more years is a beautiful thing. Not because I like my fellow humans, but because I like a long runway.

[00:12:12] Mohnish Pabrai: And so as we talk today, I have 29 years and three months and a few days left. Okay. Which is great. It’s incredible. So my 40 year self, I really wouldn’t have a lot of, well, the one big piece of learning that I’ve had in the last 20 or 21 years. That I wish my 40-year-old self-had was that I did not appreciate, I had a flawed model of investing and it stuns me that I had this flawed model of investing for almost my entire investing career.

[00:12:57] Mohnish Pabrai: It only dawned on me in the last few years that the way I’m doing things is quite stupid. So my model when I was 40 and even when I was like in my fifties, early fifties, was that you try to buy a business for half or less than it’s worth, and when it gets valued at 90% of more of intrinsic value, it’s time to move on, bring in the next mistress.

[00:13:23] Mohnish Pabrai: And that sounds rational, but it’s the dumbest thing. And the reason it’s the dumbest thing is we don’t know what intrinsic value is. We may have a guess at it. But the great businesses surprised to the upside and they really kind of blow your mind in terms of what they’re actually able to do. I mean, Warren Buffet was having difficulty playing 25 million for see’s candy.

[00:13:54] Mohnish Pabrai: Basically, the dividends that they have received in the last few decades is approaching 3 billion, you know, more than 100 x of what they invested. They still have the business, which is doing very well, but the dividends have been a hundred more than a hundred x. Right? And they would’ve never guessed that in the wildest dreams that it’s going to give us two and a half, 3 billion in dividends and counting.

[00:14:20] Mohnish Pabrai: So we are never able to really appreciate how great some good businesses can be. We also may not fully, we definitely will not be able to understand. Which businesses are the great ones till after we’ve owned them for a while. So basically the advice to my 40-year-old would’ve been would be that, listen idiot, you’re going to get some companies in the portfolio that are truly exceptional.

[00:14:53] Mohnish Pabrai: You will know that they are exceptional. I don’t need to go into the past to tell you which ones are going to be exceptional. You will know. Just change your framework, which is that when you own an exceptional business, a fraction of an exceptional business, do not sell it at 90% of intrinsic value. Do not sell it when it’s fully priced.

[00:15:14] Mohnish Pabrai: Do not sell it when it’s overpriced. You can possibly think about selling it when it’s egregiously overpriced. And when you figure out the difference between overpriced and egregiously, overpriced, call me collect. You know the call me collect Stig. The 30 somethings just missed that they don’t know what that phrase means.

[00:15:39] Stig Brodersen: Yeah, you are absolutely right. I remember in the early days I was traveling, I don’t think I had a cell phone. I don’t think you really, anyone had a cell phone other than some highflyers. But then you would go into like a convenience store and you’ll get like a phone card and then you would pluck that card into a phone booth and then you could call people. I mean, in my case, I couldn’t ask anyone to do call collect, so I had to use the phone card. I didn’t have as many friends as you, so.

[00:16:07] Mohnish Pabrai: There’s a friend of mine, I’m just to digress for a second. There’s a friend of mine in Chicago and when he had his first son, he was diehard Buffett Munger fan. When he had his first son, he named him Charlie Warren. His first name was Charlie, middle name was Warren, last name is Oberman, Charlie Warren Oberman.

[00:16:26] Mohnish Pabrai: And I remember when Charlie Warren Oberman was born and when Charlie Warren man turned 20. He contacted me and I said, Charlie Warren, do you know, I know your whole life story. So anyway, when Charlie Warren was born, his dad sent a picture of his to Warren and Charlie and Warren sent him a note back saying that Charlie Warren has a talk him, his first stalk, call me collect.

[00:16:53] Stig Brodersen: That’s just a beautiful story.

[00:16:55] Mohnish Pabrai: It’s true.

[00:16:56] Stig Brodersen: Oh, well, Mohnish I want to talk a bit about, I’m inclined to say the good old days. I don’t know if they were the good old days, so please forgive me if I’m taking that in vain. But you and your brother used to help your father with his businesses, and you previously talked about how you, it honed your skill and how you’re grateful about all the things that you learned because you were his board of directors, you and your brother.

[00:17:17] Stig Brodersen: I’d be curious to hear how is your relationship with your brother today and how much is. Nature and nurture regarding business investing success. And you don’t, I know it’s a personal question. I know nothing about your brother, so please take this, any kind of direction whenever it comes to nature and nurture that you want to.

[00:17:33] Mohnish Pabrai: My brother and I are very close in age, so there’s, three of us. We have a, I have a sister and a brother, and my sister’s four years younger than me, and my brother is 15 months older than me, so I’m kind of in the middle. We grew up together. We went to the same college, same major, and we obviously had a very parallel lives.

[00:17:57] Mohnish Pabrai: And of course, you know, I moved away from my computer engineering roots and he stayed closer to those roots. So I moved away, into investing and, he’s expert in, network security and HIPAA and all these things, but you know, we both became entrepreneurs. And we both did quite well. So it worked out.

[00:18:21] Mohnish Pabrai: So the, I think we both got, similar lessons from those early days in our teen years, which was very lucky, where we were basically exposed, you know, like drinking from a fire hydrant. We were exposed to business very early in life and not just exposed to business, but you know, like, you know, initiation by fire, you know? So, so it was, I didn’t realize at the time, but it was a great gift. It was a wonderful gift.

[00:18:52] Stig Brodersen: Well, that, that’s the thing with most, you know, things in life. It doesn’t always appear to be a gem because it’s typically packed into something that’s not always nice. So thank you for sharing.

[00:19:04] Mohnish Pabrai: Well, one of the things that I had read about with Marcus Aurelius, with his stoic philosophy is that adversity is a blessing. To encounter adversity and overcome it is a great blessing. And you know, now that’s a quote. But when I look back in my life and I look back at all the difficult times in my life, it were those difficulties that led to the greater growth and higher highs.

[00:19:33] Mohnish Pabrai: And we cannot tell this when we are going through these painful periods. And you know, Munger said that no one is immune. Everyone’s going to have reverses in life. We are not going to be able to have a life without reverses and the good news is when there’s a reverse, we should be excited.

[00:19:55] Mohnish Pabrai: So now what happens is I’m almost like an observer. If I encounter adversity now, I know that I don’t know how it’s going to help me. I don’t know how I’m going to get out of it. I’m, you know, in the middle of it. Obviously, there are a lot of challenges. But I know I have the confidence to know that this is a beautiful thing. I should be grateful, and I know this will lead to higher highs. I just don’t know how.

[00:20:20] Stig Brodersen: So play the cards and life will work out. That’s such a wonderful healthy mindset. Thank you for sharing that, Mohnish. It really makes me think of this thing where you mentioned monger and how we talked about how you should always learn from your mistakes but sometimes don’t learn too much.

[00:20:42] Stig Brodersen: Meaning don’t let it limit you. Just quickly to this point here about nature and nurture I think we, we’ve probably all seen examples of nature and nurture in some, both of ’em. And I had the pleasure of running into one of your daughters last year in, in Clusters and I was, with Guys event.

[00:20:56] Stig Brodersen: I was like, oh, so both Nature and Nurture is a play here. It’s like, boom. So here we are. I’m going to shift gears here a bit and talk about money. I guess you can say we talked about money for some time, but I’ve been wondering about this. You know, I don’t know if you ever heard this idea of like, can a penny make your, make you wealthy?

[00:21:17] Stig Brodersen: No. But then at some point, you know, if you’re building, yeah, it’s really a stack of pennies. And then at some point in time, one penny must have, you know, made you feel wealthy anyways. When was the time where you felt like an extra dollar wouldn’t increase your happiness and you can make up that dollar to whatever kind of mind amount you want? Basically, I’m asking when would, when did you feel like any additional cash wouldn’t make any difference in your life quality?

[00:21:43] Mohnish Pabrai: When I was, I think around, 33 or 34 years old that I wouldn’t be able to consume the wealth I had at that point, and I knew right then that incremental spending at that point would not increase happiness. So, I was aware of the fact that after 33 or 34, that basically there was going to be very strong likelihood of extra wealth but trying to come up with some way to spend it or even spend part of it would not have increased happiness. I always, even now, I always look at how can I make myself happier?

[00:22:26] Mohnish Pabrai: It’s a constant I’m very happy with. And if there are things that money can do that could make me happier, I’d be the first to execute on. Right. So, but there are very few things at this point. I mean, I, when you get past a certain base level, it’s not going to increase happiness. I mean, I really appreciate that Buffet and Munger had many conversations between themselves about their homes.

[00:22:54] Mohnish Pabrai: Munger built his home in the 1960s. I visited at Taos many times for having meals with him. He raised his kids over there and he’d been living in that home for like six decades. Very happy. It’s a ranch home. It’s a, you would pass it, you would not even look at it twice. You know, he wouldn’t stand out in any way.

[00:23:14] Mohnish Pabrai: And we’ve seen Buffet’s house as well. You know, that’s like, he’s been there for more than 70 years, right? And so both of these individuals talked to each other, noticed that they had friends who were obviously much less wealthy than them, who were buying big mansions and whatever else. And they just didn’t see that doing any of that was going to make them happier.

[00:23:40] Mohnish Pabrai: In fact I subscribe Munger and Buffet a little bit different in the sense that when Munger passed away, he had. Maybe half a dozen or more homes. I mean, I know there was one in Newport Beach, there might be a couple in Hawaii. There was at least two or three in Santa Barbara, and then he had his home in LA and so on.

[00:23:59] Mohnish Pabrai: So he had, you know, at least half a dozen home. Then of course in, in Minnesota where he went fishing and so on, he would tell me that, Warren had a second home in Laguna Beach, which his wife wanted to go for the, you know, Christmas holidays and all that. And he said that before Susie’s ashes had turned cold, he had put that house up for sale.

[00:24:23] Mohnish Pabrai: Okay so he had one second home, which his wife wanted, and he was happy to do that for her. He used to start writing the annual letter from the Laguna home when he went there in December, but he didn’t need it. Right. And I look at, my friend guy, for example, who has many homes, and to me that’s a headache.

[00:24:46] Mohnish Pabrai: You know, I think if I had a second home, not only would it not make me happier, it would actually make me unhappy because it would just add burdens. You know, like my books would get split into two different places. I don’t want the book screen split in two different places. I want one place, and I would have to have two setups, you know, and then I’m spending time traveling between these two setups.

[00:25:09] Mohnish Pabrai: For what? On a daily basis. I eat two meals, right? I eat brunch and I eat dinner. The brunch I eat every day is the exact same brunch I eat every day. When I’m in Austin and I’ve been having that same brunch for several years, no desire to change it. Any change would make it worse, would make me unhappy. So I’m happy with no travel.

[00:25:35] Mohnish Pabrai: I’m happy with one home. There’s very few things that money can do that can make you happier. And there’s many things money can do that can make you unhappy.

[00:25:45] Stig Brodersen: That’s wonderful. Thank you for bringing that up, Mohnish. So I sort of suspected you would say that, or so I hope you would say that cause it’s a wonderful segue into the next thing here.

[00:25:57] Stig Brodersen: So I’m going to give you an unreasonable premise here. Please feel free to challenge it, but here we go. I would make the argument that you could make significantly more money than you do now if you really wanted to, doing things you didn’t want to do. I don’t really know how, but let’s say, you would take some endowment money or something and they would want to redeem at any point in time, or you couldn’t invest in this and that sector, whatever, it doesn’t really matter.

[00:26:22] Stig Brodersen: And perhaps that completely off, but I’m pretty sure you could make more money than you do now by doing things you don’t want to do. So, assuming that’s correct, if we added another, I don’t know, let’s say we added a hundred million dollars to a net worth and we just, you know, we just learned it’s not going to make a difference.

[00:26:37] Stig Brodersen: $1 is not going to make a difference. A hundred million dollars is not going to make a difference. Then I’m going to ask you. You could give that money away. But then I’m also going to give you the premise that if you give away a hundred million dollars or $200 million, you probably don’t get extra benefit utility out of giving.

[00:26:56] Stig Brodersen: Cause you still help a ton whenever you do that. So assuming those crazy premises are right, how do you think about this? Do you feel you have a responsibility to do things you don’t want to do for money? That doesn’t make you any happier so you can give away that money and improve other people’s lives? I know that was crazy long question.

[00:27:17] Mohnish Pabrai: Yeah, I mean, I think that, for me, it’s a total no-brainer that I would never want to do something that would reduce my joy and happiness in life by even one iota. So if I’m going to do something which makes me, you know, there’s more travel, there’s more human interaction, the life is more frantic and all that.

[00:27:41] Mohnish Pabrai: It wouldn’t be of much interest now, so I would end up with more money to give away. Now, the giving away money for me has never been about any legacy or anyone patting me on the back or in any way feeling good. I was not looking, I still am not looking for any kind of reward of any kind from that activity.

[00:28:14] Mohnish Pabrai: It’s actually was designed and it was, this is how it conceived it almost two decades ago, and it’s how it is today, is I like playing games and I like playing math games and Dakshana, you know, and I tell this to the students when I meet them. I said, I’m so sorry to disappoint you, but you are part of a math game In my head, you know, I’m not actually.

[00:28:41] Mohnish Pabrai: Doing this because I have some great love to make your life better. I know that your life is becoming a lot better, which is wonderful, but for me it’s really more about the cold calculus of the game. That is what is most exciting. So the game I’m playing is that I have a compounding engine that is hopefully increasing wealth for the next 29 years and months, so on, and I have an engine which is trying to give that wealth away.

[00:29:16] Mohnish Pabrai: Right now, if we are able to compound at a, let’s say a 15% rate return, right? So life is all about doubles. It would double every five years. So approximately six doubles. Six doubles is 64x. Right. So that’s a significant amount of money or multiplication. Plus I’m getting fees on other people’s money and all that.

[00:29:45] Mohnish Pabrai: So it’d be boom, more than that, you know? And there’s some taxes, but probably you’ll still end up being more. So to me, the great challenge, and I don’t know whether I’ll be able to meet this challenge, and I’ll be disappointed if I didn’t meet the challenge, but it’s a really tough challenge, is one day before I die, June 10th, 2054, I want to have $10,000 left on maybe even 500, $5,000 left.

[00:30:11] Mohnish Pabrai: That’d be even better. Okay? Now, if a day before I die, there’s 3 billion left, I have failed. I lost the game. And now the difficulty with this challenge is I don’t want to give the money to Red Cross because the Red Cross is with due respect, suboptimal. Right. So for me, the challenge is to get, be left with 10,000, but to have it given away in a manner that any critical observer would say, that was fantastic.

[00:30:50] Mohnish Pabrai: Not my friend saying that was fantastic. Someone who’s a critic looks at it and says, that was fantastic. He may have had other flaws, but this was fantastic. Okay. So, so that’s what I’m looking for is an object, an objective observer saying now that was cool. Right Now, to me it’s extremely challenging because as the numbers get, larger, giving money away is more difficult than making it.

[00:31:14] Mohnish Pabrai: And I have a lot of respect for Chuck Freeney, you know, the book, the Billionaire who was, and which is the great book, and Chuck Freeney died with very little money rented apartment in San Francisco. Awesome. But that journey is not an easy journey, but it’s a fun journey. It’s a really fun game for me.

[00:31:32] Mohnish Pabrai: So this is like, you know, from my point of view is like three dimensional tests just for the next 29 years where I know the compounding end is pretty autopilot. I, that part I have no concerns about. It’s the other side because, for example, the current program that we run at Dakshana, where we are spending about $3 million a year, once we are spending about 7 million a year, we cannot spend any more money in that end depth.

[00:31:56] Mohnish Pabrai: We run out of seats and brains and all of that. So what if I had a hundred million a year to give away, which hopefully will happen at some point. Well that program can only take 7 million. I don’t know today what I would do with the other 93 million. And if the other 93 million doesn’t go into endeavors that make the critics say, that was awesome, that’s terrible. So that’s the challenge. That’s the whole focus of this life is playing this game, you know?

[00:32:30] Stig Brodersen: Mohnish, whenever I see you on these calls with some of the scholars from Dakshana, I can tell that you moved and that they tell you that they met you and they’ve seen you, and it’s just this beautiful, wonderful moment.

[00:32:41] Stig Brodersen: And then you tell them that they’re part of a game that you’re playing and I could just see like the pad in their eyes and they’re like, where’s this dude going with this?

[00:32:52] Mohnish Pabrai: You know, I like to have fun with them. One time I went with a friend of mine, young guy from the US to abduction campus, and he looks like Mark Zuckerberg.

[00:33:02] Mohnish Pabrai: Okay. He looks very similar to Mark Zuckerberg. And we decided before we went on the campus that I’m going to call him Zuck. Okay. And I’m going to just say, oh, this is my friend Mark Zuckerberg, you know, I call him Zuck. And he founded a company you might have heard of Facebook. And he’s going to hang out with us.

[00:33:20] Mohnish Pabrai: Okay? So I say this in the class and you know, it reminded me. It reminded me it was so funny. The thing is, one time Bill Gates was in some very rural village in India with Melinda Gates, and they go into the hut of a very poor old lady in that village. So it’s Melinda Gates, bill Gates, and this old lady in this small hut, she doesn’t have much, she’s very poor, and there were a lot of reporters, et cetera, but they were not allowed to come in the hut while the gates were having the interaction.

[00:33:56] Mohnish Pabrai: Then the gates left, okay? And then the reporters went in to talk to this lady and they said, do you know who that was? He says, oh, no, some foreigners came. You know, the lady says some foreigners came. So, the reporter said, yeah, but you know that was the richest person in the world. And the lady said, all foreigners are rich.

[00:34:19] Mohnish Pabrai: Okay? Now she was right. Because in her life experience, she had never met a white person who was not significantly wealthier than her. And for her, the calibration difference between the reporter who was white and Bill Gates, who was white, was meaningless. Right? So when I was in the Dakshana Scholar telling them this is Z, what I saw in their faces was the same thing that I would’ve seen in the face of Lady.

[00:34:48] Mohnish Pabrai: Said, all of Mauritius friends are happening. What’s unusual about that? They just took it in stride.

[00:34:58] Stig Brodersen: That’s a fantastic story. Thank you for sharing that with us. Money. I think it’s so beautiful that you’re saying that you’re not looking for a reward with everything you do and with Dakshana and it’s a game.

[00:35:10] Stig Brodersen: So I have this segment here about Dakshana because I kind of feel we should talk a bit about it and me together with some members here at TIP. We, in the very early endings of starting a school held underprivileged, scholars into the Filipino version of the IIT. And so whenever we say it, we are referring to the Indian Institute of Technology, which is not random place, I should say.

[00:35:33] Stig Brodersen: You know, you just mentioned Bill Gates before, you know, just to elevate it, he said that if you could only hire for one place it would be IAT and, you know, not whatever kind of Ivy League school. So very prestigious And our business model, if you can call it that for an NGO is has been very simple.

[00:35:48] Stig Brodersen: You know, we have a wonderful board and I said to them, I have no idea how to do this. So here’s a link to all the letters that Mohnish wrote at to Dakshana Foundation, and we’re just going to do the same just in the Philippines. And then they look at me the same way that, you know, the student, the scholar.

[00:36:04] Stig Brodersen: Yeah. Like, and then how do we do that? So anyways, I tried to, to break it down and said, you know, after reading the letters, I kind of feel like let’s try to break it down into three sections. So we want to make sure you have the best possible education. Then we want to make sure that we identify the scholars with the most potential.

[00:36:22] Stig Brodersen: And then we also want to make sure that, you know, they’re below the poverty line. And what we found is that, you know, identifying scholars below the poverty line might not sound like at the hard task, but I would say’s probably the hardest not to crack. It’s very difficult. It’s not easy. It’s not easy because there’s such a strong incentive for the scholars family to misreport their socioeconomic status. Could you please paint some color around this and how you have solved that, Dakshana?

[00:36:49] Mohnish Pabrai: Well, it’s a constant battle. So one of the issues that Dakshana faces. Is the quality of our coaching services that we offer to our scholars to get them ready for it is better than the private sector offers. Okay? So if you are a middle class family or a rich family and you had a choice, you would want your son or daughter trained at Dakshana.

[00:37:17] Mohnish Pabrai: Okay? Now, when we offer that level of quality in what we are giving, it means that everyone’s trying to crash the gate. Okay? And some people are very direct with us. Like, you know, I’ll get messages saying, I’m happy to donate $50,000 to Dakshana, if you will take my kit. Okay? Just one seat, you know, take the kit for one seat, I’ll give you 50,000.

[00:37:47] Mohnish Pabrai: Okay and 50,000 is a lot more than it would cost them to get coaching somewhere else. They’re putting a value, which is above what the private sector charges right now. Obviously, this creates a lot of incentives. And the other thing, what Dakshana has tried to do is we really want to go to the bottom of society.

[00:38:09] Mohnish Pabrai: And my definition of bottom of many other nonprofits in India find is too extreme, but we are really looking for absolutely nothing families at the bottom. Right? And so what we have done is that for our main campus where we take kids after they finished high school, we actually have in-person interviews.

[00:38:31] Mohnish Pabrai: Okay? So when we do the in-person interviews, and I should not say this because now they’re going to watch this video and then they’re going to know how to beat the system. So Stig, make sure it doesn’t play in India. Okay? I’m banking on that. So when we do the interviews, the questions we ask are not relevant, okay?

[00:38:51] Mohnish Pabrai: What we are looking at is what shoes is the person wearing? Okay? What phone does he have? So we ask him, you know, can I see your phone? And if that phone is more than a, you know, $30 phone, we know we’ve got an issue. Okay? We look at the languages that the parents speak. If they speak English, that’s a red flag.

[00:39:18] Mohnish Pabrai: Okay? Even if they speak Hindi, which is the national language, and they’re not from the northern regional India, that’s also red flag. So we’re usually trying to see that. Most of the parents have only one language to speak. We look at the education level of the parents. We look at things like, is there, television in the home?

[00:39:40] Mohnish Pabrai: Okay? Now one of the things that we do is. We do the interviews, but we have so many alums now, you know, who will want to volunteer and help us. That we send them in some cases where we get to boundary cases where we are saying it’s all there, but we are not sure. Right. And the litmus stress when we are not sure is to visit the home.

[00:40:03] Mohnish Pabrai: Okay and visiting the home is very painful and very expensive. Okay? Because it’s the middle of nowhere. Okay? But the alums are used to traveling cheap throughout India and whatever. They’ve got student fairs and all that, they don’t mind going. So we will find an alum who’s somewhat close by. But then you know what happens is every year we do an analysis of what we think was a percentage that defrauded us.

[00:40:31] Mohnish Pabrai: There is a percentage that gets through. You know that people are too smart, you know, that they get through. But it’s a very small number. It’s small, single digit percentage. And what our goal every year is to reduce that. I mean, we’ve had situations where we’ve done all this stuff, we’ve done all the analysis, and then when the person is coming to the campus for the first time, he’s being dropped off in an SUV with some very well dressed relatives and we know we got taken.

[00:41:04] Stig Brodersen: You know, I’m so happy that you bring up the example of the SUV whenever I’m speaking with the board, I’m saying you have to look at page 13 here from the 2011 report. That’s where all the goal is. And it talks about how you would sometimes do home visits. And then you were talking about an SUV when, with a family that reported less than yeah.

[00:41:25] Stig Brodersen: $60. And I was sort of like going this through because I spoke with a board about it and. One of the things that we talked about was home visits and then it came up. So we are not as far as having alumni. So that was a really good tip. cause then we run into the problem that some of the areas where you would send some of the staff would probably be dangerous to be frank, because it’s very poor and depending on how you appear, it might not be safe for you to be there.

[00:41:50] Stig Brodersen: So that, that’s part of it. But then I thought, like, going away from that, I thought about it as, you know, we have bad debt here on TIP, which I shouldn’t say, but we have some appetizers that don’t pay. And to some extent, that’s part of the business model. You know, it’s like you have bad debt, you don’t know who it is, and you try to minimize it.

[00:42:05] Stig Brodersen: But if you want to make sure that everyone prepays and you can do it metaphorically, what that would mean for an NGO. Like it would be more expensive for you to go that route and have zero bad debt, but then you lose out a ton. So I would imagine like, how do you think about that? Is that bad debt that you at the time was five to 8%?

[00:42:23] Stig Brodersen: I would imagine that it’s less now, but like, is that bad debt you have where some just, and that’s just the way it is.

[00:42:29] Mohnish Pabrai: Yeah, I mean, I think on the one hand, if we go extreme on that, we’ll be excluding deserving people, which is not good. And so there is a balance, there’s a balance we have to do.

[00:42:41] Mohnish Pabrai: So, you know, it’s like in any business, you, if you’re a retailer, you have annual shrink, you know, inventory shrinks and you are running a business, you’re going to have some bad debts. I mean, the thing is you can have, policies that reduce that and so on. That’s why Walmart came up with a greeter, right?

[00:42:57] Mohnish Pabrai: The greeter would that, that drop the shrink a lot. I mean, at the end of the day, what we’ve always tried to do with duction I is, we’d run it like a business. We run it the way you run your business, right? So this metric of what percentage of kids are we supporting that we shouldn’t have supported is a very important metric.

[00:43:17] Mohnish Pabrai: And we try to get accurate statistics on that. And all I’m trying to do is that next year slightly better than this year. On all fronts. That’s the only objective duction, is that we try to do a slightly better job on 20 different variables next year than we did this year. And we keep doing that. It ends up becoming world class.

[00:43:40] Stig Brodersen: So whenever I’m speaking with a team, I would basically take copy that from you, clone that from you, I should say Mohnish, and then say it’s so much it’s so hard to give away money and so easy to make it because of the feedback loop. And then they look at you and you’re like, sort of like arrogant foreigner.

[00:43:57] Stig Brodersen: Like why are you saying it’s so easy to make, but you know, it’s like, yes, you know where I’m going to go with this. Like, in capitalism there’s a feedback loop. If you don’t make money, you know you’ve done something wrong. And so what I said to the team is that we have one KPI and cloned this year from Dakshana, so equivalent to IIT, that number needs to be as high as possible.

[00:44:15] Stig Brodersen: You know that is the single metric we are looking at. Then whenever you do that, and let’s say the word for example, give bonuses, if it’s at certain level. Then you run into the issue that you have people who then have incentive to admit students that probably doesn’t come from below the poverty line, but you know, there’s a probably higher probability that they’re going to pass.

[00:44:35] Stig Brodersen: How do you navigate that in your organization? Do they get bonuses based on different metrics? Is it because it’s different metrics throughout the organization, or how do you handle that?

[00:44:44] Mohnish Pabrai: Well, yeah, I mean, that’s a really important thing. So incentives are a very big part of Dakshana. Our teams are very well incented, even though they have joined, many of them are joined because the calling and the purpose and, but there’s a separation of church and state.

[00:45:01] Mohnish Pabrai: So the faculty, which is really focused on teaching the kids, has no control over who we admit. And the people who are focused on, who we admit, are not compensated directly based on the results. So we’ve kind of separated those two. And even within those groups, I’m looking at it, our CEO’s looking at it.

[00:45:29] Mohnish Pabrai: So when we do selections, when we do selections, though a large amount of our success depends on our selections. You know, it, we have to make sure we’ve got the brilliance, we have to make sure we are below the poverty line and really deserving kids. And there we have tried to make sure that the incentives are in alignment.

[00:45:51] Mohnish Pabrai: And then on the other side, when we care about the results, those guys had nothing to do with who we picked. So they’re just purely focused on the results.

[00:46:02] Stig Brodersen: Fantastic. Thank you for sharing. So, you know, I should obviously say, I would encourage everyone to read the wonderful letters, even if you’re not interested in philanthropy.

[00:46:11] Stig Brodersen: They’re just interesting to learn about, you know, the business model of giving away money. So one of the things I really like in the letters is that you’re not shy about really attacking the toughest problems. And I think that whenever I speak to people about our organization and what we want to do, there is this natural tendency to focus on getting the best teachers.

[00:46:33] Stig Brodersen: Like say, yeah, it’s all good that with the poverty line and the most deserving, but you know, let’s figure out how to get the best teachers. And by and lots it’s probably the easiest problem to solve because to some extent you can throw money at it, whereas it’s a little bit trigger with the others.

[00:46:48] Stig Brodersen: And running an organization is, that’s giving away money. I think you really have to face those decisions head on. And you want to make sure that you are not falling prey to this idea of, you know, the path of least resistance. Like, what is easiest to solve instead of folks and what’s tough to solve.

[00:47:02] Stig Brodersen: And you know, so one of the problems that we’ve been looking at is should we, for example, target specifically students that come from abusive homes? And one way to, to do that is, you know, to build housing and then get them out and you know, so on and so forth. And I don’t want to drone too much on that and bum everyone out whenever I say that, but it is, whenever you do that, there’s just incredible amount of problems you run into.

[00:47:25] Stig Brodersen: And then, you know, if it’s housing and then bribes that are not even seen as bribes, but more like local property transfer tax. And there are tons of stuff going on. And so I guess my question to you is, have you identified problems where you’ve just said, this is just too hard? Like it’s wonderful if we can solve it, but we just don’t want, it’s just too hard.

[00:47:44] Stig Brodersen: We want to do hard things, but not things that are this hard. And how do you figure that out within your organization?

[00:47:51] Mohnish Pabrai: Yeah, so I think stake, you have to be realistic. You don’t, it’s not just difficult. It’s impossible to optimize for more than one variable. So when we are trying to do selections, for example.

[00:48:05] Mohnish Pabrai: We only have two things we are looking at we’re we are looking at the brilliance and we are looking at the socioeconomic status of the family. We have a couple other things, like we give some preference to girls. We give preference to disabled and so on, but we basically don’t get into a lot of stuff beyond that because if we start going into things like, like you said, abusive households and all of that’s going to become a very complicated problem.

[00:48:31] Mohnish Pabrai: We find a lot of issues in the homes of the families where the kids have come from, but we wouldn’t have known that at the beginning. It comes out in dribs and drabs over time. So I would say that would be a really difficult thing to add to your plate. I would not go there. I think that if you’re going to try to work with abused kids, don’t try to work with brilliant, abused kids.

[00:48:56] Mohnish Pabrai: Just work with abused kids with whatever you need to do to help them. Because I think now, you’re trying to put too many. Variables into the same thing, it becomes really hard. So it’s important to keep things as simple as possible. It’s important to make sure everyone understands that game plan. They’re not going to understand the game plan if it becomes complicated and then it works.

[00:49:19] Mohnish Pabrai: One of the things that has really helped Dakshana, you were talking about, you know, hiring teachers, et cetera, is our oldest alums are now early thirties, 33, 34 years old, and something like, more than half the, folks we hire now are our alums. So more and more of our alums are making up the faculty. More of our alums are making up a lot of our management team all the way except the CEO.

[00:49:48] Mohnish Pabrai: When I go one level below the CEO at Dakshana, it’s all alums. And for these individuals, it’s not about the paycheck. It’s very clear to me when I meet them that their passions for Dina. Vastly exceed mine. They’re not stupid like me playing some game. Okay. They actually deeply care about the mission, you know, so they have a purity. I don’t have, you know, it’s beautiful to see actually. It’s amazing to see.

[00:50:17] Stig Brodersen: Wonderful. Okay. Mohnish perhaps someone out there is thinking it’s Berkshire weekend. Like we started on such a high note. We did haven’t, almost not talked about investing. So thank you for your generous and candid responses.

[00:50:31] Stig Brodersen: I thank you. I just really, for selfish reasons, I wanted to ask those questions. And thank you Mohnish. I’ll now transition into something about investing. So, years ago you recommended, on this show you recommended Peter Thiel’s wonderful talk competitions for losers. And that talk was just such an eyeopener for me.

[00:50:50] Stig Brodersen: And, you know, I went from thinking that companies have a motor thinking most companies have a mode. Which I probably mainly thought because I don’t know, management told me or other bulls on value investors club told me or whatever. Of course that’s a terrible process. So turned the table and I was thinking, okay, let’s just assume that companies don’t have any mode.

[00:51:11] Stig Brodersen: And really the way to see if they have a mode is, you know, if the DOJ or sort of like pulling him into court and they keep on saying, oh, we don’t have a mode. Poor me I’m Amazon. We have such a small sliver of global retail, whatever they, you would say, that’s whenever, you know, they have a mode. And so anyways I read Rose Greenwell’s a wonderful book competition demystified, and I did that after going through that talk.

[00:51:34] Stig Brodersen: And you know, he also talks about that most companies don’t have a mote, but execution in itself can be a mote. You know, there, there’s this story that, you know, you sometimes talk about with, you know, those two gas stations and then some, you know, one owner goes out, you know, does a little extra and the other doesn’t, but like.

[00:51:50] Stig Brodersen: I’m sort of like curious to hear if we can sort of bring that up to a level and talking about how do you look at execution being the mode and how do you evaluate from the outside if a company has an execution mode?

[00:52:03] Mohnish Pabrai: Yeah, so the evidence tells us, you know, going back to the beginning of our conversation that I said, if you just held your Walmart shares and everything else went to zero, you did really well.

[00:52:14] Mohnish Pabrai: And we look at Buffet’s example where, you know, three 4% of what he invested in has truly moved the needle. The rest hasn’t done that much. So what those two pieces of data tell you is that enduring modes are few and far between. It’s just the nature of capitalism that everything gets competed away. Now, if you are someone like ASML or you’re someone like Nvidia, you know, those are some more that are going to stay for some time because you got a head start and A SML may stay forever.

[00:52:43] Mohnish Pabrai: I mean that’s like Black Magic Act. So it is really. Anomalies in capitalism that lead to moats, it’s very difficult to actually conceive of a business and then start a business saying, I’m going to have x, y, z moat and actually be successful at doing that. Even when we look at a business like Coca-Cola or we look at business like American Express, these started moatless.

[00:53:10] Mohnish Pabrai: There were no moats. The founders had no idea what a moat is, you know, and they kind of stumbled along. And in some cases, the original business model died and a new business model emerged, accidentally. And they made it so almost, impossible to start out with the idea that I’m going to create a moat and moats are very rare. So I, I would say that approach businesses and their moats with very jaundice ties.

[00:53:39] Stig Brodersen: Thank you. So I’m a bit on the fence of asking you this question, Mohnish, because I kind of feel like I’m going to paint myself into a corner. You often get this question about your circle of competence and your graceless response.

[00:53:52] Stig Brodersen: You know, if you ask that question, then you probably don’t know enough. And I feel, I still have a question about circle competence. It’s just how do how do I ask it without, by shutting it down anyways, whenever it comes to regulation, it’s such a black box for so many of us, and it’s really interesting to hear you talk about different regulation whenever it comes to different businesses and how you identify it and so on and so forth.

[00:54:14] Stig Brodersen: Like how do we, assuming that we don’t have a circle competence whenever it comes to regulation, which we probably don’t by asking this question, how do we train that as lay people, no degree in law or anything like that, h as lay people? How do we train that regulation, figuring out the impact of a business angle?

[00:54:33] Mohnish Pabrai: Yeah, I mean I think one has to approach, one has to approach circle of competence with a lot of humility. So when you say, okay, there’s this business, it can be impacted by regulations, changes in regulations, how do I handicap that? Right? And the answer is, it may be that question leads to being putting that business in the two hard pile.

[00:55:01] Mohnish Pabrai: So I think what humans have difficulty with, a lot of humans have difficulty with giving up. They don’t want to give up. Like you’re saying, okay, I like this business, I’ve seen this business, I’ve spent some time on the business, but I don’t understand this part of it. And how do I get to understanding that part?

[00:55:21] Mohnish Pabrai: And I think Buffet and Munger’s answer would be that 99% of businesses need to go in the too hard. So basically that’s where people have difficulty, where they’re not willing to easily give up. If, you know, I think it was in 2014 or something, thereabout. I used to go with Guy Pier every year to Omaha on Thursday because, I had asked Buffett’s assistant Debbie if she would go to lunch with us and she said, I’d love to go to lunch with you guys.

[00:55:56] Mohnish Pabrai: I mean, I actually love Debbie, you know, and so she said, but when you come for the annual meeting, Friday is like a zoo at the office. All these celebrities coming. I can’t. But she said, if you come on Thursday, I can go come to lunch with you guys on Thursday. So Guy and I, you know, we’re general leisure.

[00:56:10] Mohnish Pabrai: We have nothing going on. Okay. So we can go on Thursday. We can go on Monday. We don’t care. Okay. So we started going to Omaha Thursday morning and then we’d go meet Debbie for lunch. And one year, I think it was in 2014, by the way, the lunches was Debbie, which we had for several years, blew away the lunch with war.

[00:56:28] Mohnish Pabrai: Like it was so much fun. And I used to always tell Debbie, I start I start the conversation with Debbie like that. I said, Deb, Debbie, between us girls, can we talk? Can we really talk? She said, Monish, what do you want to know? Anything you want to know, I’m going to tell you. Okay. And then we would talk about all kinds of things.

[00:56:46] Mohnish Pabrai: It was just great. So one year in 2014 when we went to have lunch with Debbie and we come to the 14th floor of Kiwi Plaza, the elevator opened and Warren is standing there. So I thought, okay, he is maybe going in the elevator somewhere. But it turned out he was standing in the lobby of the elevator to greet us.

[00:57:04] Mohnish Pabrai: Okay? Fortune 10, CEO, coming to the elevator for meeting two yo-Yos, who he doesn’t have an appointment. Okay? So I start talking to Warren and I think he’ll take the elevator down. And then he says, you guys want a tour of headquarters? I said, Warren, if you want to waste your time with a couple of yo-yos, we are all game.

[00:57:24] Mohnish Pabrai: Okay? And so he said, let me give you a tour. So he’s showing us all the memorabilia in the office and he showed up the letter he sent to Long-Term Capital management when he was trying to buy that business. And then the first shares of Burlington Northern and his Coke machine, his Coke fountain, he has got its private Coke fountain.

[00:57:43] Mohnish Pabrai: And he was like showing how it works and all that was, you know. And then finally he takes us to his private office to show us his office, right? Private office. And I noticed that on his desk there’s a box which says too hard. And I heard about this right here, that a box which says too hard and the box was empty.

[00:58:01] Mohnish Pabrai: So I said, Warren, the two hard pile. Everything’s supposed to go in the two hard pile. You have all these piles of papers, nothing’s in the two hard pile. What’s going on? He said, oh, that’s just an illusion. Monish. It takes a bunch of papers and dumps it in the two hard pile. See, it’s completely full now, and we are going to put more in it so it’s even more full.

[00:58:25] Mohnish Pabrai: But a guy like Warren needs to have a box on his desk. That’s, and you know, if you go to God, Google and say, buffet two hard picture, it’ll show a picture of him in his office with the two hard pile box. Okay? God, Google will show you whatever you want, okay? So you can see the box, okay? And, and so someone as disciplined as word needs a physical box to remind him that most things he cannot understand.

[00:58:58] Mohnish Pabrai: This is a very high IQ guy. This is, you know, a guy who’s a child prodigy and all of that, right. He still has the humility to understand that 99% of stuff I’m not going to understand. So this regulation question, the moment you encounter something like that, be very comfortable. With saying no very fast to almost everything. There should be 10 companies in the world that you understand and there should be 10,000 that you have no clue about.

[00:59:32] Stig Brodersen: And then I should say, well, in, I’m in that lucky situation that being an investor in Pabrai funds, I don’t even need to understand it. But I did give myself the challenge to read up on the 10 Ks the other day and I was thinking, I don’t understand this, but to refine.

[00:59:49] Stig Brodersen: But I hope you do. I hope you do. Mohnish. And it’s takes me to my next question here. I’ve had a lot of people because I do talk about, you know, different stocks. I invested. I’m not as smart as you. I can’t own 10 stocks. I only have five stocks. cause I only feel I understand five companies apparently, at least at a reasonable valuation.

[01:00:07] Stig Brodersen: And so I like to say to people that, that minus is over diversified. Whenever they tell me, honest is so concentrated, I was like, yeah. But even like for my and then you of course can say that, you know, and let’s say in your, one of your funds, you know, racist is just, you know, what, 60%.

[01:00:21] Stig Brodersen: Like it’s a massive part of it, right? Like, so I’m probably the only one of your investors who feel like you’re, you know, not too concentrated. But anyways you can quote me on that. I hope I don’t speak out of school whenever I mentioned that, but I, it takes me to the, so I get asked by a ton of people.

[01:00:36] Stig Brodersen: So why, like, apparently you have this podcast. You sit around you are a bit of a yo-yo, you just sit at reading in 10Ks, you don’t really understand too many. So you’re only invest in five. Why do you also invest with Monish? And so one of the things I tell them is that, you know, I have to be humble.

[01:00:51] Stig Brodersen: I only have a track record that’s from 2014, so I don’t even know if I’m any good. You know, it’s like you should probably play this thing you hear about mine talks about Walmart and like how important it is to have one winner and what that means. And so I. One of the things I say to tell people is that, you know, it gave me a lot of comfort investing with you because you know, you set up the first fund, what, 1999 and then the two others shortly after.

[01:01:13] Stig Brodersen: And so I was kind of thinking like at least two decades, that’s a good time of saying you have a long runway, but then at the same time you also have a long track record. cause we want to have our cake. You needed too. But I guess my question is, how long should a track record be and how much should it outperform before you can say, with a 90% certainty, 95% certainty that it’s skill and not luck?

[01:01:35] Mohnish Pabrai: Yeah, that’s a great question. I would say you need plenty of time. You need, more than 10 years and preferably something like 20 years.

[01:01:46] Stig Brodersen: Simple as that. How do you think in terms of, in, in terms of over performance? And I know like it’s, I know it’s sort of re unreasonable question cause it’s tough to come up with, you know, an equation just.

[01:01:56] Stig Brodersen: Call collect me whenever you have the equation, Mohnish. But you know, it’s like, of course there’s a difference between have you beaten the SAP 500 or whatever kind of index for like 0.1% or 5% or 10. Like, you know, we all know like what Buffet did in your early days of the B Buffet partnership. So how do you, I know that I’m tee it up for you in a terrible way, but like, how much outperformance would you need to see over, let’s say 20 years before we can say, Ooh, this is scale. This is not 0.1%, this is truly scale.

[01:02:25] Mohnish Pabrai: Well, I would just like to point out something that when Ted Wexler was being hired by Berkshire Hathaway, I think he joined in 2010, thereabouts. I think around then, and maybe a little bit later, but in the 2007 to 2009 time period, he was down more than 70%. So they hired a guy who, when they looked at the recent past before they hired him, it looked horrible.

[01:02:57] Mohnish Pabrai: The numbers looked horrible. He was 30 points behind the S&P in those years, but they still hired him because they looked kind of past, they looked at the kind of longer term record and went with that. So I think the thing is that when we look at someone like, let’s say Steve Bomber, you know, there, there’ve been three CEOs at Microsoft, and I talked to some Microsoft investors who hate the period of owning the stock when Steve Bomber was CEO, but it really wasn’t fully Steve Bomber’s fault.

[01:03:34] Mohnish Pabrai: He came in when the stock was ridiculously overvalued and he left when it was ridiculously undervalued. And then Satya comes in with an undervalued company and he hit her out of the park. So, I mean, he created a lot of value, but he was, his starting point was a value stock. And so we can get a lot of distortions even looking at 10 year periods because of this notion, because you know, markets can be very overvalued.

[01:04:03] Mohnish Pabrai: So I would say that anyone, when they’re compared to the S&P in the last decade is going to not be looking great because the S&P is coming off in incredible tenures. But the next 10 years, a lot of yo-yos will probably beat the S&P. Okay. Because it’s so elevated. So I think the selection of an investment manager is one of the most difficult things to do. Very hard to do.

[01:04:32] Stig Brodersen: Alright, well Mohnish, thank you for being with me on this metaphorical restaurant trying all of these new dishes here. I don’t know if it was tasteful or not, but any, any concluding remarks.

[01:04:47] Mohnish Pabrai: I very much enjoyed the conversations today. It was fantastic. Well and we got a sample, a bunch of new dishes.

[01:04:53] Stig Brodersen: We did. We did.

[01:04:54] Mohnish Pabrai: We mixed it up with some of the oldest gold, but we got some new dishes in there too.

[01:05:00] Stig Brodersen: All right. As I’m letting Mohnish go, I want to wish you a happy Berkshire weekend if you’re listening to this after the Woodstock of capitalism, or you just could make it this year. We have our own version of a virtual year-round Berkshire here on The Investor’s Podcast.

[01:05:14] Stig Brodersen: So if you’re a kindred spirit in value investing in philanthropy and want to hang out with me and the Verde Group online, you are welcome to join our wait list for the TIP Mastermind Community. We have a link in our show notes for more information. My co-host, Clay Finck, will contact you with more details of the next steps in the process and how to submit an application.

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