Mohnish Pabrai: How To Never Sell & Sleep Well

During this interview with Meb Faber, Mohnish Pabrai discusses the mindset that will allow investors to never sell and sleep well. This strategy was successfully used by the Walton family, the founders at Google, and the founder of IKEA. Here’s an excerpt from the interview:

Pabrai: I think the mental model you have to use is, think of yourself as the founder or the entrepreneur. So if I look at the Walton family, they’re the only ones who’ve held Walmart from 1970 until today.

And they held it after Sam Walton was gone, they held it when there were no Waltons running the place, I think there might one Walton on the board or something.

And they’ve had no control over this business, and they’ve held it for this entire period.

And so why should an investor use a different framework from an entrepreneur?

So we see this all the time. You see entrepreneurs have 99% of their wealth in the business they created, and they go to sleep at night very comfortable with that.

And people say, “Well, they’ve got control.” Well, control is overrated, it’s not really the control. So I think that the framework we have to use is to think of ourselves as, if we are not the founder, we are basically an owner or a partner.

So think of it as a partnership in a private enterprise. And so I think that once you make that shift where you say that, “This is a family business, and I own 30% of the business. I’m not the founder, but I have a significant stake, and I understand the business.”

Then those two, the investor, the entrepreneur, start blending. I mean, we see this over and over, you see the Ikea guy.

I mean, basically he put the entire company into a foundation, but 99.99% of his net worth was Ikea. And we just see that with all these entrepreneurs, all over the place, and they remained comfortable. If you look at the Google guys, they stepped aside, but they kept their stake, and perfectly okay.

You can watch the entire discussion here: