6: Mohnish Pabrai on Raising Daughters, Finding His Way, and Lunch with Warren Buffett

Have you ever wondered what happens at the annual Warren Buffett lunch that's auctioned off each year? Mohnish Pabrai joins us to share what it was like to take his daughters to that lunch in today's episode! Mohnish Pabrai is the founder and Managing Partner of the Pabrai Investment Funds, the founder and CEO of Dhandho Funds. Listen in as he shares his own journey into business, building a family, and giving back to his community through the Dakshana Foundation.

Investing the Templeton Way with Lauren Templeton is a podcast that explores the world’s most intriguing investment topics from the overseas markets to mastering our own minds. Gather investment wisdom and educate yourself as you listen to interviews with exclusive managers, executives, and entrepreneurs on a wide range of engaging topics.

Meet Mohnish Pabrai

Mohnish Pabrai is the founder and Managing Partner of the Pabrai Investment Funds, the founder and CEO of Dhandho Funds, and the author of The Dhandho Investor and Mosaic: Perspectives on Investing.

As a family man, Mohnish has always involved his daughters in his profession without putting the pressure on them to join the industry. Although, Mohnish's daughter, Monsoon decided to pursue the financial field as a career. When she entered into investing, Mohnish soon realized that she has a superior approach—which he believed to come from her own personality traits.

By the age of 6, born traits are engrained in you, and you spend the rest of your life learning traits. When it comes to investing, Monsoon holds two investing traits that have truly impacted her for the better:

She hates to trade.
She is bias towards high quality.

To Mohnish, this is valuable and follows suit to how he believes investing can be successful. One of his favorite authors, Thomas Phelps, once said, "Every sell decision is an investing mistake." If you're investing, trading, or holding, it's important to review those investing decisions over time.

Lunch with Warren Buffett

Since Mohnish has always involved his family in his career, when he won a lunch with Warren Buffett, it was important to him to take them along with him. At the time, his girls were young, but Warren left them with a piece of advice they've carried with them to this day. He said, "The most important decision you will make in your lives is who you decide to marry."

Warren didn't just leave that impact on Mohnish and his family, but he left them with a really valuable and impactful experience. Warren's big focuses at these lunches is that he wants to make sure that the buyers of these lunches feel that they got a bargain.

It wasn't just a lunch, it was an afternoon affair that lasted as long as they wanted. Warren Buffett spent the lunch answering 50+ questions, having conversation, and providing advice. Not only did he provide that value, but he also built connections for Mohnish.

Warren set up a time for Mohnish and his wife at the time to meet Charlie Munger for lunch, as she was a big fan. This meeting became a quick, unfiltered friendship for Mohnish that consistent of lunches, dinners, and bridge games.

Investing in a lunch with Warren Buffett was one of the most valuable investments Mohnish has made in his life.

Mohnish's Journey

Mohnish grew up in India, but left for Dubai at the age of 16 to complete high school. After high school, he attended Clemson University for his undergrad.

Mohnish looked to his parents as role models—they provided in the best way that they could and his involvement with his father's business highly impacted his journey. Mohnish's father was an entrepreneur that was really good at identifying offering gaps in the market, then creating businesses that went after those niches. He could build a business from nothing and scale it really fast.

One of the downfalls of his father was that when the business started to fail, it would fail fast and impact their personal finances. At an early age, Mohnish and his brother were brought in to brainstorm how to make businesses last one more day. In these childhood experiences beginning at age 11, he was building really valuable experience that impacted his neuron connections, which weren't fully developed yet.

By the age of 19, he'd had a lot of business acumen that wasn't provided in the standard educational system. when he became an engineer, he found that the engineers didn't care about the big picture like he did. He wanted to know the big picture of whatever his business was. That's when he switched to business.

In 1991, Mohnish started his own business using $30,000 from his 401k and $70k in credit card debt. Nine years later, he sold it for $20 million.

While owning that business, he found a book that mentioned Warren Buffett, which opened a whole world of investing. He quickly realized that the framework that his dad and him used to start and run a business is really the same mental models you use to figure out whether an investment makes sense or not.

What are the two or three variables that drive the outcome in any investment and are they predictable? As long as you as an investor can get to the same models that the CEO is usually using to run the business, you have a basis to figure out where it's going to go.

Mohnish's Advice to Investors

The biggest piece of advice Mohnish can give to investors is to ignore the noise. There are so many things that can impact investments and it's hard to ever predict anything that is actually going to happen. Use logic and facts to make your investing decisions.

Philanthropy as an Investor

If you're good at investing, then you can't help but get rich. We can't take it with us and giving large inheritances to your gene pool is just going to do more harm than good. A great way to combat this is through charity and philanthropy work.

Mohnish has built the Dakshana Foundation, a charity that helps identify gifted kids who don't have the same financial opportunities as others. Those children are gifted the chance to get into IIT. While these schools are free to get into, they're difficult to get into—the coaching and prep alone to get into them is expensive.

Each year, they work with 1000 kids and have a 70-80% success rate for them getting into IIT. If you're making great money while investing, consider donating to or starting your own charity or foundation.

Connect with Mohnish:

https://pabraifunds.com/

http://www.dhandhofunds.com/

http://www.chaiwithpabrai.com/

Mentioned in this Episode:

Book: Mosaic: Perspectives on Investing

Book: The Dhandho Investor

The information presented in this podcast or available on the website is not intended as and shall not be construed as financial advice. This podcast is produced for entertainment value. Investing is inherently risky. And I encourage you to seek financial advice from a professional who is aware of the facts and circumstances of your individual situation.