I had a conversation a few years back with Charlie Munger and he mentioned that he always had someone to talk to about investments. So I said, "Oh you mean like Mr. Buffett." And he said, "Well, it wasn't always Warren. But I've always had someone to talk to." In fact recently he said that -- I think at the Daily Journal Meeting -- even Einstein needed someone to talk to. Each human brain processes the same information differently. And to the extent that you can find someone who's thoughtful and not processing data similar to you, it would be useful to have those conversations. But I think that that is different from having a team. So if you have, say, analysts under you, and they report to you, then the incentives and the dynamics of that exchange are very different from having a peer where there is no vested interest of any kind, and [it's just] two people having conversations about thoughts. So I never appreciated... I think for most of the history of Pabrai Funds I operated making decisions on my own. And I have a good friend, Guy Spier, and usually he and I will talk about things that either he's looking at or I'm looking at, and many times we don't agree. And many times I'll buy things that he won't buy or he'll buy things that I don't buy, and so on. So if you look at our portfolios, they are way different from each other. But I've found it very useful to have those conversations because, actually, Guy runs a fund on his own. Neither of us has any economic interest in the other fund. We don't gain or lose anything by what happens. And I'm confident that he's confident that we are candid in sharing our beliefs and perspectives. And that's useful.
So I think that it is valuable to have that type of a relationship, and it doesn't even need to be an off-the-charts person. I think just having someone else... One of the things that happened just this year actually, in Omaha, I was at this brunch and Charlie Munger was there. And he was sitting there and nobody was next to him. So I decided to help the guy out and give him some company, just so he doesn't get bored, and I took Guy with me. And I said, "Charlie, this is the person I talk to about my investments." And Charlie immediately got very interested. He's kind of checking Guy out. And then Guy says to him, "I don't know why Mohnish cares to talk to me because I really have nothing to add to anything he usually comes up with." So Charlie says, "Well, going through the process of talking to someone else about your ideas requires you to put them together in a certain kind of format and manner that can be articulated to the other person. And that process is useful in seeing some flaws in your argument." So then Guy says to Charlie, "You know, Mohnish could actually just do that with a monkey." And Charlie says, "Yes, but the problem is that Mohnish would know it's a monkey. And so it wouldn't work."
So with Charlie, I saw in that interaction, and I've seen it when I've talked to him, he puts a huge amount of weight on that notion of having another person to bounce things off of. And so I actually don't move on anything now until I've had at least one conversation, and sometimes many conversations [with Guy]. And as I said, we may not agree, but exactly as Charlie said, it forces me to put my thoughts in an organized manner, and hear some perspectives that may be different and such. So it's a huge advantage, but I think you have to set it up where there's no vested interest, there's no axe to grind, and it's a trusted relationship.
Monday, February 16, 2015
Mohnish Pabrai on Guy Spier, Charlie Munger, and having another person to bounce things off of...
From Pabrai's December 2014 talk to Sanjay Bakshi's MDI class (from about 48:13 to 53:53), and slightly edited for clarity: