In this interview with The Wall Street Lab, Mohnish Pabrai discusses two big mistakes you can make by being a cheapskate. Here’s an excerpt from the interview:
Pabrai: Well, I think, what I have, as Munger says, we are old too soon, and wise too late. What is gradually sinking in is a willingness to pay up. The other thing that is sinking in, which is more important, a willingness to hold. So it is not… I mean the two big mistakes that I have made aren’t, I mean one is very obvious, passing on a number of great businesses because they looked optically overpriced.
In the end it turned out they were not overpriced but when you looked at them they looked expensive. It’s just that they were such awesome businesses that you could have paid 30/40 times earnings and still done really well on them.
The second more difficult thing is that you buy something that’s an incredible business. Maybe it’s available at 10 times earnings, and you know it’s worth 20 or 30 times earnings. It does well, it gets to 20/30 earnings and you sell and it keeps going, that’s the other thing.
So those are the two big mistakes being too much of a cheapskate, not paying up, and being too much of a cheapskate and not willing to hold. I’m hoping to get better at both of those. There’s still a lot of learning and growth for me to do.
You can watch the entire discussion here:
For all the latest news and podcasts, join our free newsletter here.
Don’t forget to check out our FREE Large Cap 1000 – Stock Screener, here at The Acquirer’s Multiple: