Chai with Pabrai Mohnish Pabrai's Talk at the YPO Waterloo Austin on October 17, 2023
Dec 4, 2023
Mohnish Pabrai, investor and author, talks about the power of compounding and the importance of starting early. He discusses the story of Chuck Feeney, a billionaire philanthropist, and shares his journey of investing. Pabrai also touches on entrepreneurship vs. investing, index investing, and handling macro risks in business.
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Manhattan Sale Compounding Anecdote
- In 1626, Native Americans sold Manhattan Island to the Dutch for $24. The real loss was not the sale price but failure to invest and compound that money wisely over centuries.
Compounding's Exponential Power
- Einstein called compounding the eighth wonder of the world because it works exponentially, not linearly. Most people struggle to grasp how wealth grows dramatically over long periods through compounding.
Teaching Daughter Compounding Early
- Mohnish taught his daughter about compounding using her summer job savings of $5,000 in an IRA. Over 50 years at 15% returns, that could grow to $5 million, illustrating compounding's power to her.