Money and Finance
- Buffett Disciple Mohnish Pabrai On Bank Of America, Citi, Google, And Hyundai
Link to article: Buffett Disciple Mohnish Pabrai on Bank of America, Citi, Google, and Hyundai“I have heard [Warren Buffett’s business partner] Charlie Munger more than once say that a well-diversified portfolio needs four stocks,” says Pabrai,...
- Mohnish Pabrai Interview Segments On The Motley Fool
Thanks to Will for passing these along. Links to: Checklist Investing: How to Avoid Errors and Learn From Mistakes The Number One Trait of a Successful Investor How Investors Should Think About the Economy The Untraditional Path of Becoming a Great Investor...
- Oilprice.com’s Interview With Mike “mish” Shedlock
Link to: Oilprice.com’s interview with Mike “Mish” Shedlock *** I don’t necessarily agree with everything he says, but this is an interesting interview. If you substitute ‘undervalued stocks’ in place of ‘gold’ in his recommendation of...
- Seth Klarman On Position Sizing
I posted this a couple of years ago (HERE), but since there seems to be a lot of new readers to the site, I thought maybe it would be good to post again. The quote below is my transcription from one of Klarman’s answers at the Graham & Dodd Breakfast...
- Whitney Tilson: Hot Favourites Won’t Always Turn Out To Be Great Winners
To this last point on buying and holding, the funds I co-manage have recently sold several long positions, driven by our belief that the odds of a significant market correction over the next year have increased substantially. We’re not predicting Armageddon,...
Money and Finance
Mohnish Pabrai on position sizing
In the UC Davis class discussion, Mohnish Pabrai mentioned how he switched from a 10x10 model of position sizing (10 positions of about 10% each) to a more diversified model after the 2008-2009 crisis. He then went on to discuss how he has switched back and what he thinks the real lesson to learn was (the quote is my transcription and not an exact quotation, so errors are mine….the discussion on position sizing began at the 42:40 mark of the video):
“In hindsight, I think the correct lesson to learn from 2008-2009 was to hold cash. And I didn’t have cash at the time….I have now gone back to the 10% allocations that I had done for most of my investing career, with the caveat that I always want—except in times of extremely severe distress—to [not] be fully invested. And so for example, as I talk to you today, I’m sitting on plenty of cash….It is an interesting market right now. There are very few bargains around, but the bargains we have been able to find are wildly undervalued, so it actually lends itself very well to be a concentrated investor. I could not today come up with 20 stocks that I thought were undervalued, but I could easily come up with 5 or 6…I think the game is just perfect for me to play with a concentrated portfolio and holding cash. So that’s where we are, and I think it’s the way to go. I think Munger always says that a well diversified portfolio just needs 4 stocks.”
Guy Spier mentioned that he thinks Mohnish is right, but that there are two good reasons to be less concentrated: 1) being congenitally more fearful and risk averse (i.e. internal comfort); and 2) having a relationship set up with your investors that makes it proper to be more diversified.
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Related: For Seth Klarman’s thoughts on position sizing, see the bottom paragraph HERE.
- Buffett Disciple Mohnish Pabrai On Bank Of America, Citi, Google, And Hyundai
Link to article: Buffett Disciple Mohnish Pabrai on Bank of America, Citi, Google, and Hyundai“I have heard [Warren Buffett’s business partner] Charlie Munger more than once say that a well-diversified portfolio needs four stocks,” says Pabrai,...
- Mohnish Pabrai Interview Segments On The Motley Fool
Thanks to Will for passing these along. Links to: Checklist Investing: How to Avoid Errors and Learn From Mistakes The Number One Trait of a Successful Investor How Investors Should Think About the Economy The Untraditional Path of Becoming a Great Investor...
- Oilprice.com’s Interview With Mike “mish” Shedlock
Link to: Oilprice.com’s interview with Mike “Mish” Shedlock *** I don’t necessarily agree with everything he says, but this is an interesting interview. If you substitute ‘undervalued stocks’ in place of ‘gold’ in his recommendation of...
- Seth Klarman On Position Sizing
I posted this a couple of years ago (HERE), but since there seems to be a lot of new readers to the site, I thought maybe it would be good to post again. The quote below is my transcription from one of Klarman’s answers at the Graham & Dodd Breakfast...
- Whitney Tilson: Hot Favourites Won’t Always Turn Out To Be Great Winners
To this last point on buying and holding, the funds I co-manage have recently sold several long positions, driven by our belief that the odds of a significant market correction over the next year have increased substantially. We’re not predicting Armageddon,...