**
Mohnish Pabrai on How to compound at 26%?**

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**Portfolio strategy by
Mohnish Pabrai:**

**1 ^{st} 75% of
cash ----minimum 2x in 2 to 3 years**

**Next 10%
----minimum 3x in 2 to 3 years**

**Next 5%
----minimum 4x in 2 to 3 years**

**Next 5%
----minimum 5x in 2 to 3 years**

**Last 5% of
cash----excess of 5x in 2 to 3 years**

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**Do not invest in
anything that does not look like a 2-3x in 2-3 years.**

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**If a stock trades at
10. It is a pass**
**(i.e. we do not invest)**** if
intrinsic value is 13 or 14 or 17 or even 19.[fair value of business is say 19
and it is traded at 10. Then 19/10 = 1.9x, which is less than minimum 2x. Thus
he doesn’t buy]**

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**You just need to find
2-4 businesses annually that meet above criteria.**

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Here is how Pabrai summarized his presentation:

·
**
Accept one idea and focus on it seriously**

·
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Remember the magic and power of compounding**

·
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Clone from the best investors**

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**For Examples:**

**
If one compound at 26%, then the money is
going to double roughly every 3 years, so in 30 years one will get 2 ^{10
}=1024 = 1000(say). **

**
**

**
If one invests $1,000,000 then in 30 years
one add 3 more 000 to it (multiply by 1000) and one gets roughly $1,000,000,000.
**

**
($1m to $1B)**

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**

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If one invests $1,000,000 then in 20 years
one add 2 more 00 to it (multiply by 100) and one gets roughly $100,000,000.
**

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**
If one invests $1,000,000 then in 10 years
one add 1 more 0 to it (multiply by 10) and one gets roughly $10,000,000
**

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**
If one compound at 15%, then the money is
going to double roughly every 5 years, so in 30 years one will get roughly 2 ^{6
}=66. **

**
**

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If one invests $1,000,000 then in 30 years
one multiply by 66 and one gets roughly $66,000,000. **

**
**

**
If one invests $1,000,000 then in 20 years
one multiply by 16 and one gets roughly $16,000,000. **

** **

**
If one invests $1,000,000 then in 10 years
one multiply by 4 and one gets roughly $4,000,000. **

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**
If one compound at 12%, then the money is
going to double roughly every 6 years, so in 30 years one will get roughly 2 ^{5
}=30. **

**
**

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If one invests $1,000,000 then in 30 years
one multiply by 30 and one gets roughly $30,000,000. **

**
**

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If one invests $1,000,000 then in 20 years
one multiply by 10 and one gets roughly $10,000,000. **

** **

**
If one invests $1,000,000 then in 10 years
one multiply by 3 and one gets roughly $3,000,000. **

**
**

**
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**If you go for the
Index fund, you cannot beat the Index. So in order to get 26%, you have to be
different from what the index is doing. **

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**Basically, you make
few investment, very big investment, infrequent investment, and you make
investment when the investment is in your favor. **

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**In investing you can
be wrong some times, but if you are convinced of one’s strategy over the long
term it will be OK. **

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**Be a Cloner. Clone
from the best like Warren Buffett.**

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**Pre-investment
Checklists by Mohnish Pabrai**

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**

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PRE
INVESTMENT CONVERSATION WITH A PEER INVESTMENT MANAGER.
Discuss with another investor, like Warren
Buffett and Charlie Munger pair.**

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**See the following:**

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**
https://cbs360.gsb.columbia.edu:8443/ess/echo/presentation/670921b2-4bad-4843-8dc5-4026360f1369**

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https://www.youtube.com/watch?v=tt2TfdI0fFE**

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https://www.youtube.com/watch?v=xa1CH2nK1cM**

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**
https://www.youtube.com/watch?v=z2YhBr_HRCw**

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**
https://www.youtube.com/watch?v=sh1I7ojlJLM**

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**
http://www.cornerofberkshireandfairfax.com/**

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**
http://www.valueinvestorsclub.com/**

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**
http://www.grahamanddoddsville.net/**

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**
http://www.sec.gov/ (us securities and exchange commission)**

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