Mistakes are the best teachers. One does not learn from success. It is desirable to learn vicariously from other people's failures, but it gets much more firmly seared in when they are your own.
Entrepreneurs are great at dealing with uncertainty and also very good at minimizing risk. That's the classic great entrepreneur.
You don't make money when you buy stocks. And you don't make money when you sell stocks. You make money by waiting.
There is no such thing as a value trap. There are investing mistakes.
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.
People see poverty all around them in India, but they are desensitized or immune to it. I came to the conclusion that poverty is driven by lack of education.
What is John Arriaga's circle of competence? Is it real estate? No! Is it U.S. real estate? No! Is it California real estate? No! Northern California real estate? No! Only real estate around Stanford. His circle of competence is this small.
I think a lot of people are getting more serious about how to do the most good, but there is no road map. I'm hoping I can offer an example.
It is the performance of the business that matters. It is hard enough to figure out the future of the business. Do not try to figure out the future of the country or the world; focus on the business.
The only way one should buy stocks is if you understand the underlying business. You stay within the circle of competence. You buy businesses you understand.
The good news in investing is there are no HR problems. If there are no humans, there are no problems!
Industries with rapid change are the enemy of the investor. Tech businesses, particularly biotech, is a problem from that point of view. All industries work with change, but you should ideally be investing in businesses with a low rate of change, not a high rate of change.
When I ran a small IT services business in the 1990s, it had strong recurring revenues - yet I couldn't accurately forecast cash flow for even the next few quarters. Small changes in the customer base or losing/hiring a few key employees could create massive swings in cash flow.
Talking to people is beneficial if you can identify the right people to share ideas and discuss decisions because everyone has blind spots, and others can sometimes catch yours. I think an investment team is a bad idea, but it is a good idea to talk to trustworthy individuals who do not have biases or interests.
The stock knows that I bought it, and it decides, 'Mohnish is done. Now let's go down.'
I have a hard time getting past the day without the nap, so the nap is a must.
The good thing about getting wealthy is we don't need to understand a lot of things!
One of the reasons why we can make a lot of money in equity markets is because they're auction-driven, and auction-driven markets are very different from almost any other kind of market.
You know, my degrees are in computer engineering. I spent a lot of time in the tech industry. And I like to say that I don't invest in tech because I spent time in it. And I saw firsthand that the durability of technology moats is many times an oxymoron.
Basically if you study entrepreneurs, there is a misnomer: People think that entrepreneurs take risk, and they get rewarded because they take risk. In reality entrepreneurs do everything they can to minimize risk. They are not interested in taking risk. They want free lunches and they go after free lunches.
