In this interview with UNC Kenan-Flagler Business School’s Investment Management Club, Mohnish Pabrai explains why investors who find themselves at the bottom of a deep well need to have a long rope to get out. Here’s an excerpt from the interview:
Pabrai: So one of my principles is that when you find yourself at the bottom of a deep well you need to have a rope to get out.
What I mean by that is that… so if I go back to 2008 and ’09… so at that time I think was down 65, 67 percent from the peak in 2007 to the bottom in March 2009, we’re probably down two-thirds.
And I used to be managing like $600 million in 2007, and I was managing less than $200 million in 2009.
And everything looked beat up right. And so what I did, I think the rope I used at that time was I just created a spreadsheet which showed me what these businesses were worth, and what the portfolio was worth.
And the portfolio was actually worth more than $600 million, and so I didn’t fixate on you know the market value is so much and this and that, because again we’re not looking for the market to instruct us we have other plays to get instructed.
You can watch the entire discussion here:
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