Excellent Interview of Mohnish Pabrai
Two key takeaways,
A) Even in cloning do not blindly venture beyond your circle of competency. There might be discussions on various stocks promising stupendous returns, but without thorough understanding of the sector and risks it is better to stay out.
“…There are also competence differences. **I may not unnderstand some things they invest in because they just donât fit within my parameters. **For example, if you look at their 13F filing, recently they bought a company called Davita. They own $1 billion worth of Davita stock. Davita basically runs dialysis centres. They are the second largest kidney dialysis provider in the world. **It is a very specialized business â I donât understand a lot of dynamics about that. They clearly have a moat but it is unlikely we will invest in them. **The commonality would be that I would be looking to buy things well below what they are worth. I donât understand it but probably Davita is trading well below what it is worth…”
B) Accept a lost investment in the right context and move ahead. It is critical to treat each losses as incremental learning and more to make sure the mistakes are not repeated rather than focusing on loss.
"…Actually, my funds were down from peak to bottom 65% or so. But my wife mentioned to me that she didnât realise the funds were down that much because throughout that period, she saw no change in my behaviour pattern or my sleep pattern or anything like that. You have to keep things in context. There is a famous quote: if wealth is lost, nothing is lost. If health is lost, something is lost and if character is lost, everything is lost.
The other important thing is I am not bouncing up and down with stock prices. I donât even know what the markets or my stock did today. All of that is just irrelevant…"