Mohnish Pabrai: Why It’s So Difficult To Replicate Warren Buffett’s Past Returns Today

Johnny HopkinsMohnish PabraiLeave a Comment

During his recent interview with the CFA Society of Mexico, Mohnish Pabrai explained why it’s so difficult to replicate Warren Buffett’s past returns today. Here’s an excerpt from the interview:

Pabrai: Charlie Munger tells me that if Warren and he was starting out today they could not do what they did.

He said that when they started out they used to shoot fish in a barrel after the water had been let out. And so there was relatively few people looking at a relatively large universe of different stocks and assets.

Now we have a lot of brain power directed towards relatively narrow number of stocks and markets and so on. So anytime you have a large number of intelligent people with a lot of money looking at certain assets you’re generally not going to find a lot of mispriced opportunities.

They’ll still exist because if you think long term that can give you an edge. I think you have to zag when people are zigging.

For the most part I think I have one stock I own in the U.S and I own a few stocks in Turkey. No-one has any interest in Turkey that has 80% annual inflation on an official basis. On an unofficial basis it might be even higher than that. And so everyone and their brother has exited Turkey.

When I bring up Turkey to really smart friends of mine, who are really good value investors, who moan and grown that they cannot find anything to buy, they immediately dismiss it.

“I don’t want to talk about Turkey, I want to talk about U.S.”

The thing is that there is always mispriced securities, underpriced securities in some area or segment that is usually hated or unloved and most people do not want to go into places that are hated and unloved.

You can watch the entire interview here:

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