Mohnish Pabrai: Focus On No-Brainers

During this presentation at MDI, Gurgaon, Mohnish Pabrai explained why investors should focus on no-brainers. Here’s an excerpt from the presentation:

Pabrai: Well that’s a good question. So the good news is that there is the too hard part.

One time I visited Omaha, Warren gave me a tour of his office and I saw that on his desk there’s a box which is labelled ‘too hard’, right.

So I told Warren that the box is empty. I said there’s nothing in the box. How can we have a… he said we’ll take care of that. I’ll give you a whole bunch of stuff to put in the box.

So the thing is that ninety-nine percent of things that are happening in terms of assets and whatever’s going on, they want to go into a too hard part.

So the good news is we can become extremely wealthy without ever predicting when a bubble’s going to burst.

If you just have enough knowledge to know that something may be a bubble, not even… like I don’t know if Amazon is a bubble right, but the good news is we don’t need to answer that question, it’s irrelevant.

So the key thing is you don’t need to try to forecast when a bubble is going to start and when it’s going to end, or any of those things.

You can sidestep most of it because what ought to happen in investing, value investing is it is hard enough when you focus on the low breakups.

So I always try to at the end of the day before I finally make an investment I always try to ask myself is this a no-brainer? And then of course we invest in the no-brainer. And even then we go to a happy place.

So when this is already so much trouble with no-brainers why go into an area which is slightly off from being a no-brainer.

You can watch the entire discussion here: