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Mohnish Pabrai - The Number One Trait for Investment Success
Posted by: CanadianValue (IP Logged)
Date: December 31, 2012 11:07AM

Next to Buffett, I think Pabrai is my favorite teacher of investing concepts. In this video he tells us what he thinks is the number-one trait required for investment success.

I'll give you one hint, it starts with the letter "P"...






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Re Mohnish Pabrai - The Number One Trait for Investment Success
Posted by: batbeer2 (IP Logged)
Date: December 31, 2012 01:50PM

Patience is only required if you go in with the intention of selling.
In that case you're renting stocks, not owning them.

The person looking to buy a business outright is generally (there are exceptions) not going in with the idea of selling later at a higher price. Why behave differently if you are looking to buy small pieces of a business?

Just some thoughts.




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Re Mohnish Pabrai - The Number One Trait for Investment Success
Posted by: sapporosteve (IP Logged)
Date: January 1, 2013 12:55AM

I find this "Be patient" rather unhelpful. I dont think it helps without defining what it actually means in terms of actions. So if I am looking to buy should I "be patient". And if I should be then what does that actually mean? What if the stock I am considering goes up and up and I miss out because I was being "patient".

The same kind of thinking can be applied to when you are considering selling. Should I sell now or be patient and wait some more. Well how long do I wait?

If the market appears overvalued then yes, it might pay to be patient. But again how long does one wait or be patient for? Be patient and miss the 2009 rebound?

Ultimately it is a simply a judgement call and I can not see how this is advice that is useful in any practical terms.

regards



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Re Mohnish Pabrai - The Number One Trait for Investment Success
Posted by: vgm (IP Logged)
Date: January 1, 2013 03:44AM

I don't think it's all that difficult to understand what Pabrai means. Essentially everything Pabrai says is a Buffett paraphrase. And Buffett has said plenty on on Patience as a virtue in investing - for example: "The stock market is designed to transfer money from the active to the patient."

Patience means waiting for the opportunity to buy the great business at a fair price, and not buying something mediocre simply because it's cheap and you have money burning a hole in your pocket. Patience means waiting thru thick and thin for your investment thesis to play out, to maintain the courage of your convictions, and not be affected by Mr Market and the herd daily yelling that you're wrong. (Here I think of Bruce Berkowitz waiting patiently and confidently for his financials during 2011)

This all presupposes you've done the hard work of discovering which companies are worth the wait.

Whether or not Patience is the primary trait for an investor is a moot point. It is undoubtedly a critical component of a successful value investor's make-up, however.

Sapporosteve - missing the 2009 rebound would not be considered patience in my opinion, but rather the inability to recognize real bargains and/or the lack of courage to pull the trigger. In fact, in many ways it was precisely the moment patient capital was waiting for.

Happy New Year!



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Re Mohnish Pabrai - The Number One Trait for Investment Success
Posted by: batbeer2 (IP Logged)
Date: January 1, 2013 07:03AM


This all presupposes you've done the hard work of discovering which companies are worth the wait.

Yes



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Re Mohnish Pabrai - The Number One Trait for Investment Success
Posted by: superguru (IP Logged)
Date: January 1, 2013 06:40PM

Agree with Pabrai and VGM,

recognizing which fish to catch is darn hard work. Also I have lot of patience now to wait for the fish but when it comes I am unable to commit big enough % to it. I do not research hard enough.




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Re Mohnish Pabrai - The Number One Trait for Investment Success
Posted by: sjzhao2003 (IP Logged)
Date: January 1, 2013 09:23PM

It seems to me what he means by patience is simply discipline. Sticking to what you know best is discipline. Not being tempted by value traps or influenced by Mr Market's tantrums is discipline. Only investing in ideas in which you have very high degree of confidence, whether or not Mr Buffett is buying, is discipline.

Recognizing a fat pitch when you see one is knowledge, but swinging really hard at fat pitches and nothing else is discipline, and that's what separates the hall of famers from the also-runs. Recognizing a fat pitch often requires a lot of work, but it's not a real fat pitch if it doesn't smack in your face.



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