Chai with Pabrai Mohnish Pabrai's Session with YPO Delhi on July 9, 2024
6 snips
Aug 9, 2024 
Mohnish Pabrai, a value investing luminary and founder of Pabrai Investment Funds, shares profound insights on compounding interest and its three pillars. He reflects on historical investment decisions like the Manhattan purchase in 1626 and compares the performance of See's Candies with Coca-Cola. Pabrai discusses the nuances of investing in Indian businesses, touching on Varun Beverages, and the global implications of consumer behavior in finance. He emphasizes the importance of patience in investment, advocating for a long-term strategy aligned with business principles.
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Power of Compounding Illustrated
- Compounding turns small sums into trillions over centuries; 24 dollars invested in 1626 Manhattan could grow to 24 trillion.
- Humans struggle with compounding as it is exponential, not linear growth, but it is key to long-term wealth.
Rarity of Great Investment Ideas
- Warren Buffett’s greatest investing ideas were very rare, averaging one every five years.
- High investment hit rate isn't necessary to build extraordinary wealth; patience and selectivity are key.
Fast Payback Key to Value
- Investment value depends on how fast you recover your initial outlay, not just growth or hype.
- Buffett demands capital back quickly; longer paybacks or overvalued tech often mean passing on the investment.