Rule #1 Finance Blog

With Investor Phil Town

InvestEd Ep. 173- Investing Perspectives of Mohnish Pabrai (Part 2)

This week we’ll continue discussing the investing perspectives of the greats, specifically Mohnish Pabrai. While Pabrai is certainly a Rule #1 style value investor, we will explore how his style differs from his peers Charlie Munger and Warren Buffett. We’ll talk about international trade and how to ensure that you understand the companies you are buying.

In Episode 173 You’ll Learn:

What is Pabrai’s style of Value Investing?

  • While Pabrai follows the Value Investing principles, Mohnish differs in a few ways:
    • While Munger and Buffett sit in cash waiting for a drop in price on a wonderful company, Pabrai more closely associates himself with the concept of always being invested.
    • Pabrai explores international investing opportunities in places like India and Japan, while his contemporaries focus almost entirely on U.S. companies.
    • Since Pabrai manages funds for others, he has an obligation to shareholders to stay invested.

What Pabrai’s style can teach us:

  • As with the Rule #1 style of investing, Pabrai seeks out wonderful companies that are “mispriced” or on sale and buys a select number of these.
    • Mispricing: similar to a business on sale, mispricing becomes evident when looking at earnings per share vs. price of the stock.
  • Whether investing locally or internationally, the principles of Rule #1 and value investing should remain the same.
  • Pabrai is able to make international investments because he has a very clear understanding of their markets.
    • We need to always be sure we understand everything we can before we chose to invest.

Links from this episode:

 

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On the InvestED podcast, Phil and his daughter Danielle shine a light on the successful investing strategies that gurus like Warren Buffett have used for 80 years. Listen in for a great stock market education on basics, learn how to invest on your own, and follow along with real-time examples and investing tips from week to week.