In his interview at the 5th European Value Investing Conference, Mohnish Pabrai championed a powerful, yet underutilized, strategy for success: shamelessly borrowing other people’s best ideas.
He argues that a natural human aversion to cloning creates a significant edge for those willing to adopt it. “What I found is that if you are a shameless cloner like yours truly uh it gives you a huge edge because there is so many things in the world that have already been done by great people.”
For Pabrai, this philosophy extends beyond investment picks to foundational models, as demonstrated by his replication of the Buffett partnership’s fee structure decades after its success.
On the subject of investment philosophy, Pabrai detailed a significant evolution in his thinking, a correction born from his cloning approach. He confessed, “I did a terrible job with cloning… because I overdosed on Ben Graham for the longest period and I underdosed on Charlie Munger.”
His key realization was that true optimization demands extreme conviction. “The simple thing I didn’t understand is that if the job is done right, your portfolio is going to be 95% one stock.”
He now advises investors that when you find a great business with a great manager, “you shut the brain off… as long as the business is doing well and the manager is good, just leave it in the portfolio.”
This principle of concentration requires immense patience, a trait Pabrai links to another borrowed idea. He paraphrases Pascal, stating, “all investment manager misery stem from their inability to sit quietly in a room alone and do nothing.”
The essential skill for an investor, he suggests, is to become “really good at watching paint dry and enjoying the process.”
Ultimately, Pabrai’s method is a testament to the power of learning from the best. His entire career, from fund structure to portfolio concentration, is built on the premise that “we benefit a lot by standing on the shoulders of giants.”
His journey, as detailed in this talk, demonstrates that the most innovative path may be to intelligently follow the trails already blazed by others.
You can watch the entire interview here:
https://youtu.be/wuNJVSssTC4?si=8lSLSl238yXRuMRV
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One Comment on “Mohnish Pabrai: “Shut the Brain Off” When You Own A Great Business”
Thank you!