Mohnish Pabrai: You Only Need A Minority Of Investments To Get You To The Promised Land

In his latest interview with The Investor’s Podcast, Mohnish Pabrai explains why you only need a minority of investments to get you to the promised land. Here’s an excerpt from the interview:

Pabrai: I’ve made a lot of mistakes. So that’s just, I would say part for the course. John Templeton used to say that, “The best analyst will be right two out of three times.” And Peter Lynch said that, “If you’re right 60% of the time, you’ll do really well.” And no one’s going to be right 90% of time.

So even the Warren Buffetts and Charlie Mungers of the world make plenty of investing mistakes. Investing is hard because we have to look into the future. We have to look at a business and try to extrapolate what that business looks like five years or 10 years from now in the future. And capitalism is brutal. So it’s really hard to always be correct on that.

I’ve never felt with any mistake that this is not going to work, that I’m in trouble or anything like that. I think that many of us who practice the art, we try to be perfectionist, right?

We try really hard before we make an investment to dot all the I’s, cross all the T’s, run the checklist and try to make sure that it won’t come back to bite us in some way. But even after we do all that, we’ll still be wrong 30, 40, 50% of the time.

So that’s the difficult part of our investing is that, well, it’s also, I would say it’s also the thrilling part because it means you’ll never master it. So the goal is always to protect your downside. But no matter how much you try, you’re never going to be perfect at it. I mean, that downside is there. The nature of investing is that if you make a bunch of bets and they’re made with the right frameworks, a minority of the investments might get you to the promised land.

You can watch the entire discussion here: