{"id":6956,"date":"2024-02-16T13:21:12","date_gmt":"2024-02-16T07:51:12","guid":{"rendered":"https:\/\/aayushbhaskar.com\/?p=6956"},"modified":"2024-02-17T20:01:42","modified_gmt":"2024-02-17T14:31:42","slug":"mohnish-pabrai","status":"publish","type":"post","link":"https:\/\/aayushbhaskar.com\/mohnish-pabrai\/","title":{"rendered":"7 Great Investing Lessons from Mohnish Pabrai","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"
Nowadays, investing is something that everyone wants to do as it is one of the best ways to create wealth.<\/p>\n
Being an investor, you should know that the stock market is indeed the best way to earn money, but it definitely can put you in a financial crisis if you don’t do the right research for the stocks you’re investing in.<\/p>\n
Speaking of stock market research, many investors consider Mohnish Pabrai \u2013 An Indian-American businessman, investor, and philanthropist, their idol and follow his investment path to succeed in their stock market investment journey.<\/p>\n
Mohnish Pabrai founded the Pabrai Investment Funds and Founder & CEO of the Dhandho Funds.<\/p>\n
Though not a household name in the West, Mohnish Pabrai is the Midas of Indian investing.<\/p>\n
His record of spotting promising growth companies, identifying their flaws, and waiting for the market to recognize their potential has made him one of the most respected investors.<\/p>\n
Let\u2019s now learn some investment lessons from Mohnish Pabrai\u2019s investing approach.<\/p>\n<\/div>\n
Being an investor alongside an Entrepreneur, Mohnish always believed to be an investor playing on the safe side. He says that entrepreneurs are great at dealing with uncertainty and are also very good at minimizing risk.<\/p>\n
Being an entrepreneur, he learned one thing, which is to minimize risks from every sector he invested <\/span>in<\/span><\/span>.<\/span><\/p>\n So, from the stock market<\/a>, if you can’t make more money, you can at least minimize the risks involved in your investment by playing safe.<\/span> Either way, you’re not earning much, but not even losing. Though it is safe to play, I would like to call this investment approach a smart one.<\/span><\/p>\n Pabrai uses the Gujarati word “Dhandho<\/span>“<\/em><\/strong> which means endeavors that create wealth.<\/p>\n More specifically, in the context of investing, he is referring to high-return business ventures with low downside risk. These are businesses where even if things go wrong, you can still make money.<\/span><\/p>\n Dhandho investors don’t try to be clever or outsmart anybody. They <\/span>simply<\/span><\/span> buy businesses with a margin of safety \u2013 they pay a low enough price that if <\/span>they’re<\/span><\/span> wrong,<\/span> they won’t lose much.<\/span> If they’re right and the market eventually realizes it, there are plenty of<\/span> upsides.<\/p>\n <\/p>\n He compares his investment approach to the two sides of the coin by saying<\/span>. \u201cHeads I win, tails I don’t lose much.\u201d<\/p>\n This approach can be comprehended<\/span> as low risk,<\/span> and high uncertainty because<\/span> even if they don’t get much profit from the investment, they can at least expect to get minimal risks.<\/p>\n In short, being a business personality, Mohnish Pabrai believes in investing in “low-risk, high returns” stocks rather than “high-risk, higher returns“.<\/span><\/p>\n Mohnish says,<\/p>\n “The single biggest advantage a value investor has is not IQ. It’s patience and waiting. Waiting for the right pitch, and waiting for many years for the right pitch.”<\/strong><\/em><\/p>\n -Mohnish Pabrai<\/strong><\/em><\/p><\/blockquote>\n In the last two decades, the stock market has seen its share of<\/span> ups and downs. During this time, there<\/span> have been many occasions when the market has fallen by more than 10 percent in one day.<\/p>\n However, investors like Mohnish Pabrai are not worried about such volatility in the market. They know that if they buy good stocks at the right time and hold them for a long<\/span> period, they can give unimaginable returns.<\/p>\n2. Investment is All About Waiting<\/strong><\/h3>\n