Other[Music][Music][Music][Music] welcome back to the show everyone this is a very very special episode for me and I'm sure for many of you uh we have on today Mr monish P monish welcome to the show
QuestionerRobin it's a pleasure to be with you and for those of you who don't know um monish is the founder he's the hge fund manager behind peai investment funds and more recently um the peai wagons fund uh collectively in aggregate I believe monish you manage around a billion dollars uh USD that's correct yeah um so in 2022 monish uh you moved from California to Austin Texas what was the Catalyst behind the move
Questionerthere were a few different catalysts I mean we had been evacuated twice in the last few years in California due to the fires and after we came back there was residual kind of smoke and burning smell in the home for several weeks even though we
Otherhome for several weeks even though we were running air purifiers Etc and Iwere running air purifiers Etc and Iwere running air purifiers Etc and I didn't think that was going to stop anddidn't think that was going to stop anddidn't think that was going to stop and it hasn't stopped so that was one reasonit hasn't stopped so that was one reasonit hasn't stopped so that was one reason the second is that California hasthe second is that California hasthe second is that California has amongst the highest state income taxamongst the highest state income taxamongst the highest state income tax rates in the country they don't reallyrates in the country they don't reallyrates in the country they don't really care whether you're income is comingcare whether you're income is comingcare whether you're income is coming from long-term gains or ordinary incomefrom long-term gains or ordinary incomefrom long-term gains or ordinary income whatever it's all the same and federalwhatever it's all the same and federalwhatever it's all the same and federal tax system in the US does give you sometax system in the US does give you sometax system in the US does give you some lower rate for long-term gains whichlower rate for long-term gains whichlower rate for long-term gains which California doesn't so basically when ICalifornia doesn't so basically when ICalifornia doesn't so basically when I was paying my taxes in Californiawas paying my taxes in Californiawas paying my taxes in California approximately a third of that went toapproximately a third of that went toapproximately a third of that went to the state and there were several statesthe state and there were several statesthe state and there were several states in the US that I could have moved toin the US that I could have moved toin the US that I could have moved to where that oneir would go to zero sowhere that oneir would go to zero sowhere that oneir would go to zero so fires were one reason some optimizationfires were one reason some optimizationfires were one reason some optimization on taxes and I looked at the states thaton taxes and I looked at the states thaton taxes and I looked at the states that are zero tax in one case not only is theare zero tax in one case not only is theare zero tax in one case not only is the state zero tax the state pays you everystate zero tax the state pays you everystate zero tax the state pays you every year and which is Alaska you know they
Questioneryear and which is Alaska you know they pay all their residents a few thousand a year based on their oil revenues in the end it boils down to for the most people it boils down to Texas and Florida and Austin was interesting and so that's what I decided to do that a smart move all around and um I believe a couple years ago maybe it was last year the Wall Street Journal did a feature on you um but specifically you're you're you know big Library which we can see behind you it's it's Immaculate um how many books would you say are in your library right now
Otheroh I've never uh tried to count it maybe a couple of thousand I don't know that's amazing something like that did you have a lot of input into the design itself or you just leave it up to the design firm well I had a gifted designer I was working with I had a library in California mhm and that
Othera library in California mhm and that Library actually was inspired by a wonderful author in New Delhi and in fact a guy Spear and I had visited that author's home and we loved his Library it was just great so I I tried to incorporate some elements of his library in in my California home and then when I was moving to Texas my California library basically had run out of room there were books everywhere it could maybe accommodate 40% of the books I had so there was a need to increase the size and also you know have some room for future growth I mentioned it to my designer kind of what I was looking for and I had another requirement which is a kind of a weird requirement for her is that I need to sleep in a room with no windows oh and because I like it to be completely dark and uh you know even blackout curtains didn't quite work for
Questionerblackout curtains didn't quite work for me so in California I had actually whenme so in California I had actually whenme so in California I had actually when we had we didn't build a custom home butwe had we didn't build a custom home butwe had we didn't build a custom home but the the Builder was able to accommodatethe the Builder was able to accommodatethe the Builder was able to accommodate that he gave me one small room like I 12that he gave me one small room like I 12that he gave me one small room like I 12 by 12 which had no windows which wasby 12 which had no windows which wasby 12 which had no windows which was awesome for me to sleep and it wasawesome for me to sleep and it wasawesome for me to sleep and it was dark and so I told her any home I wasdark and so I told her any home I wasdark and so I told her any home I was going to buy anywhere was never going togoing to buy anywhere was never going togoing to buy anywhere was never going to have such a room okay no one else hashave such a room okay no one else hashave such a room okay no one else has this so I told her that I needed a roomthis so I told her that I needed a roomthis so I told her that I needed a room created which would be my primarycreated which would be my primarycreated which would be my primary bedroom that didn't need to be large butbedroom that didn't need to be large butbedroom that didn't need to be large but needed to have no windows so the spaceneeded to have no windows so the spaceneeded to have no windows so the space that you see behind me which is thethat you see behind me which is thethat you see behind me which is the library she did something verylibrary she did something verylibrary she did something very interesting this space used to be just ainteresting this space used to be just ainteresting this space used to be just a empty kind of a den type space upstairsempty kind of a den type space upstairsempty kind of a den type space upstairs in the home it was pretty large and whatin the home it was pretty large and whatin the home it was pretty large and what she did was she put my windowless roomshe did was she put my windowless roomshe did was she put my windowless room basically in the middle of it and shebasically in the middle of it and shebasically in the middle of it and she surrounded it with the library sosurrounded it with the library sosurrounded it with the library so basically the exterior walls of that
Otherbasically the exterior walls of that room are some of the walls of the room are some of the walls of the library so for example you know if you see a charer bust and part of a Buddha painting behind me that's one of the walls of my bedroom I see here you have nice light just beaming through Yeah so basically she didn't give me in my mind the library would be a room and what she did is she made it around another room right so it's kind of the flowing space that goes around and it's a beautiful space actually to hang out and then you know you see the blue color that's all her I mean you know that's way above my pay grade to come up with such stuff but what she did was there's a ridiculously expensive paint company in the UK which makes these kind of pig M paints called a pharoh and ball they're kind of like a designer paint company and she said that basically when the sunlight hits that
Otherbasically when the sunlight hits that paint you just get a kind of a great effect so she wanted to use you know I never got go tired of it so the library basically changes color throughout the day uh which is yeah so I love the way she did it in with the blue and then she put I mean my my office is kind of integrated into the library and she made my desk and everything marble it's Italian marble and so uh yeah and after I moved in it was so comfortable to work here that I stopped going to work I mean I work out of my home office I don't blame you all the time which is great and it's productivity went up the nap room is 10 ft away and life is good it's it's the ultimate Roi like you got your return on investment because the blue is calming it's wonderful it's it's just an amazing design um you recently one one other thing is that you know she somehow
Otherother thing is that you know she somehow got contacted by some reporter in the Wall Street Journal and she said hey you know you guys might have an interest in this library because it's kind of a finance type guy so the Wall Street Journal in the Mansion section you know they do every Friday they featured the library which was a lot of fun and the funny thing is after that story ran the realtor who sold me this house he knew when we had done the deal that this is my last home that I have no I hate to move you know and I said you know this is it we're done you know for the rest of my days on Earth this is I hope where I'm hanging out so he calls me and says look I know that this conversation is not going to go anywhere but I kind of had responsibility to at least call you and he says there's couple in Connecticut that saw the Wall Street
WarrenConnecticut that saw the Wall Street Journal article MH and they would like to buy your home okay and so he said well you know that it's not on the the market so the realtor representing them says to my realtor well my client says that everything on the planet is on sale for a price and so I told him you know they're absolutely right everything is on sale for a price and they can have the home and I gave a ridiculously high price it was more than three times what I had paid for the home right and I thought that'd be the end of it okay that be the end because you know I'm a value guy how can I ignore how can I ignore someone giving some euphoric price at a place that I don't want to ever leave right uh so I said okay if they gave me this price I could bite the bullet and actually think of a move okay they don't go away they come back and
Otherthey don't go away they come back and ask for moreask for moreask for more pictures okay so I didn't really want topictures okay so I didn't really want topictures okay so I didn't really want to spend a lot of time you know chasingspend a lot of time you know chasingspend a lot of time you know chasing things or you know wasting time so Ithings or you know wasting time so Ithings or you know wasting time so I told my realtor to tell them that beforetold my realtor to tell them that beforetold my realtor to tell them that before I sentI sentI sent pictures I had two requirements yeah thepictures I had two requirements yeah thepictures I had two requirements yeah the first requirement was they had tofirst requirement was they had tofirst requirement was they had to disclose their identities which I didn'tdisclose their identities which I didn'tdisclose their identities which I didn't know yet right and the second was thatknow yet right and the second was thatknow yet right and the second was that they had to write me at least a threethey had to write me at least a threethey had to write me at least a three paragraph onepage essay it didn't needparagraph onepage essay it didn't needparagraph onepage essay it didn't need to be more than a page or page and ato be more than a page or page and ato be more than a page or page and a half explaining why they wanted to payhalf explaining why they wanted to payhalf explaining why they wanted to pay two or three times the market price fortwo or three times the market price fortwo or three times the market price for this home and you know humans hate tothis home and you know humans hate tothis home and you know humans hate to write except for you Robin hum to rightwrite except for you Robin hum to rightwrite except for you Robin hum to right and they came back and they didn't writeand they came back and they didn't writeand they came back and they didn't write the essay but they offered it's amazingthe essay but they offered it's amazingthe essay but they offered it's amazing they offered 75% of my asking pricethey offered 75% of my asking pricethey offered 75% of my asking price without any pictures or anything elsewithout any pictures or anything elsewithout any pictures or anything else and I turned them down so that was thatand I turned them down so that was thatand I turned them down so that was that just wanted to give you that little bit
Questionerjust wanted to give you that little bit of story that I've never told anyone oh of story that I've never told anyone oh of story that I've never told anyone oh was a great story were you surprised were you surprised were you surprised monish when they revealed their identities they never revealed their identities they never revealed their identities oh they they didn't have they they didn't have they they didn't have they never sent me the essay they never never sent me the essay they never never sent me the essay they never revealed the identities just just made revealed the identities just just made revealed the identities just just made an offer you know if they're smart about an offer you know if they're smart about an offer you know if they're smart about it they could have just asked chat GPT it they could have just asked chat GPT it they could have just asked chat GPT right like maybe you write it for me right like maybe you write it for me right like maybe you write it for me which leads to my next question it was which leads to my next question it was which leads to my next question it was actually on chat GPT where I asked you actually on chat GPT where I asked you actually on chat GPT where I asked you know like how how old is Mr monish PAB know like how how old is Mr monish PAB know like how how old is Mr monish PAB right now and I believe you turned 60 right now and I believe you turned 60 right now and I believe you turned 60 last year if if it's correct how did it last year if if it's correct how did it last year if if it's correct how did it feel the turn 60 mon has your philosophy feel the turn 60 mon has your philosophy feel the turn 60 mon has your philosophy on life changed now that you know like a on life changed now that you know like a on life changed now that you know like a a different stage of your life now well a different stage of your life now well a different stage of your life now well you know the funny thing is that as I you know the funny thing is that as I you know the funny thing is that as I got older in my head I always felt like got older in my head I always felt like got older in my head I always felt like I was 25 you know if you asked me when I I was 25 you know if you asked me when I
OtherI was 25 you know if you asked me when I was 45 years old you know how old do youwas 45 years old you know how old do youwas 45 years old you know how old do you feel i' said 25 you know I I just feltfeel i' said 25 you know I I just feltfeel i' said 25 you know I I just felt like I was like a 25 year old I don'tlike I was like a 25 year old I don'tlike I was like a 25 year old I don't feel like I'm a I'm a I'm a 25y old nowfeel like I'm a I'm a I'm a 25y old nowfeel like I'm a I'm a I'm a 25y old now but I don't feel I'm 60 mhm it's somebut I don't feel I'm 60 mhm it's somebut I don't feel I'm 60 mhm it's some number significantly less than 60 whichnumber significantly less than 60 whichnumber significantly less than 60 which is good but it's not 25 it's actuallyis good but it's not 25 it's actuallyis good but it's not 25 it's actually moved up a bit the other interestingmoved up a bit the other interestingmoved up a bit the other interesting thing is that if you go to metlife'sthing is that if you go to metlife'sthing is that if you go to metlife's website you know the life insurancewebsite you know the life insurancewebsite you know the life insurance company and you answer a fewcompany and you answer a fewcompany and you answer a few questions they will actually tell youquestions they will actually tell youquestions they will actually tell you when you're going to die it's beautifulwhen you're going to die it's beautifulwhen you're going to die it's beautiful you could also do that with chat GPT Iyou could also do that with chat GPT Iyou could also do that with chat GPT I think so I used to think that I wasthink so I used to think that I wasthink so I used to think that I was going to leave planet Earth on June 11thgoing to leave planet Earth on June 11thgoing to leave planet Earth on June 11th 2014 44 oh my goodness and metti told me2014 44 oh my goodness and metti told me2014 44 oh my goodness and metti told me that it's actually going to bethat it's actually going to bethat it's actually going to be 2054 so I used to think I'd be dead and2054 so I used to think I'd be dead and2054 so I used to think I'd be dead and gone atgone atgone at 80 and now they tell me I'll be dead and80 and now they tell me I'll be dead and80 and now they tell me I'll be dead and gone atgone atgone at 90 and so that's that's pretty good it's90 and so that's that's pretty good it's
Questioner90 and so that's that's pretty good it's like yeah almost 30 years it's a whole lifetime and and there's there's just so much more to do like you're you're doing so many amazing things and impacting lives in a positive way with the dakshana Foundation um by 2050 uh how many lives will you have impacted by then let's give another 25 years because you're doing incredible things
OtherI actually have not ever thought in those terms I mean one way to think about it is that D's kind of annual budget currently is about $3 million a year and basically have about a thousand kids a year graduating or from a program or coming into our program it's what a $3,000 a kid approximately so that answer depends on you know what is happened with the compounding and how much are we spending so if we were for example at that point something spending something like 100 million a year for
Othersomething like 100 million a year for example then yeah and the format may change in fact it it will change it won't be because this program cannot scale more than $67 million a year so that's I haven't ever thought about that question my motus operandi is basically to try to generate the highest social return on invested Capital right so basically try to figure out which initiatives deliver the biggest bang for the buck to society it may not even be kids you know it could be unrelated to kids for example it could be something else could be environment could be Health but that's how I would measure it is how we have the most impact and I'm sure it must feel really nice to receive some of those letters from the students have successfully gone through the program and have benefited yeah I mean I enjoy interacting with the students I
Otherenjoy interacting with the students I think the the few days a year I get tothink the the few days a year I get tothink the the few days a year I get to interact with them always tend to be theinteract with them always tend to be theinteract with them always tend to be the best days of the year for me they'rebest days of the year for me they'rebest days of the year for me they're wonderful but in terms of kind ofwonderful but in terms of kind ofwonderful but in terms of kind of driving me if you will you know I'm kinddriving me if you will you know I'm kinddriving me if you will you know I'm kind of wired I would say wired weirdly Iof wired I would say wired weirdly Iof wired I would say wired weirdly I like to play gameslike to play gameslike to play games and a lot of the games I like to playand a lot of the games I like to playand a lot of the games I like to play are mathematical games right and like Iare mathematical games right and like Iare mathematical games right and like I I I I play bridge regularly soI I I play bridge regularly soI I I play bridge regularly so compounding is a game Bridge is a gamecompounding is a game Bridge is a gamecompounding is a game Bridge is a game Blackjack is a game and Dua is a gameBlackjack is a game and Dua is a gameBlackjack is a game and Dua is a game and actually what is interestingand actually what is interestingand actually what is interesting interesting to me about Dua and how Iinteresting to me about Dua and how Iinteresting to me about Dua and how I cannot slice it which is not the waycannot slice it which is not the waycannot slice it which is not the way most people would slice it is it's amost people would slice it is it's amost people would slice it is it's a math game the math game actually has youmath game the math game actually has youmath game the math game actually has you know two sides to it the compoundingknow two sides to it the compoundingknow two sides to it the compounding game and the DU math game are kind ofgame and the DU math game are kind ofgame and the DU math game are kind of joined at the hip if you will one gamejoined at the hip if you will one gamejoined at the hip if you will one game is trying to maximize you know returnsis trying to maximize you know returnsis trying to maximize you know returns and net worth and all that and the otherand net worth and all that and the otherand net worth and all that and the other game is trying to give it all away M and
Warrengame is trying to give it all away M andgame is trying to give it all away M and if I am absolutelyif I am absolutelyif I am absolutely successful in playing the game perfectlysuccessful in playing the game perfectlysuccessful in playing the game perfectly which is what I'm trying to do play thewhich is what I'm trying to do play thewhich is what I'm trying to do play the game perfectly then one day before I diegame perfectly then one day before I diegame perfectly then one day before I die there should be like $10,000 left so ifthere should be like $10,000 left so ifthere should be like $10,000 left so if you think about it you know I've gotyou think about it you know I've gotyou think about it you know I've got like little less than 30 years oflike little less than 30 years oflike little less than 30 years of compounding left hopefully the brain iscompounding left hopefully the brain iscompounding left hopefully the brain is still functioning then and we're goingstill functioning then and we're goingstill functioning then and we're going to try to on a risk adjusted basis getto try to on a risk adjusted basis getto try to on a risk adjusted basis get the best possible returns and I thinkthe best possible returns and I thinkthe best possible returns and I think the challenge will not be so much on thethe challenge will not be so much on thethe challenge will not be so much on the compounding side I think the challengecompounding side I think the challengecompounding side I think the challenge would be on the give give back side M aswould be on the give give back side M aswould be on the give give back side M as the numbers get larger I will have tothe numbers get larger I will have tothe numbers get larger I will have to lower the bar right now I'm in alower the bar right now I'm in alower the bar right now I'm in a Hog Heaven situation that I can beHog Heaven situation that I can beHog Heaven situation that I can be extremely picky about you know whichextremely picky about you know whichextremely picky about you know which program and what we do I mean D'sprogram and what we do I mean D'sprogram and what we do I mean D's program currently I am not aware ofprogram currently I am not aware ofprogram currently I am not aware of anything any nonprofit is doing anywhereanything any nonprofit is doing anywhereanything any nonprofit is doing anywhere in the world that delivers a higher
Questionerin the world that delivers a higher Social return on invested Capital but that particular Endeavor cannot take more than 6 7 million a year once we get to 10 million or 20 million or 30 million a year by definition I will have to Lad the bar not the end of the world so the absolute dollars will increase but we'll have to lower our sights and that's fine so to me the whole thing is a math game right it's okay what is the next best I still haven't figured this out what is the next best program we could focus on and what is great Investments we should focus on right so so to me it's just a game basically on both sides and so what's the next personal game for you now that you've moved to Austin and as you look around as you ingrain yourself in the community is is there something you've had in mind that you want to tackle that you want to you know learn
Warrentackle that you want to you know learn and perfect the thing is that the games and perfect the thing is that the games and perfect the thing is that the games I'm playing are such long games and they are such fun games that I don't need any are such fun games that I don't need any are such fun games that I don't need any more games I mean what I'm saying is more games I mean what I'm saying is more games I mean what I'm saying is basically I have four games I spend my basically I have four games I spend my basically I have four games I spend my time on now so there's there's Bridge time on now so there's there's Bridge time on now so there's there's Bridge compounding Dua and golf okay I used to compounding Dua and golf okay I used to compounding Dua and golf okay I used to play some blackjack I don't it's a play some blackjack I don't it's a play some blackjack I don't it's a boring game basically because everything boring game basically because everything boring game basically because everything is kind of cut and dry and I'm not very is kind of cut and dry and I'm not very is kind of cut and dry and I'm not very interested in you know flying 3 hours to interested in you know flying 3 hours to interested in you know flying 3 hours to Vegas and all that so Blackjack is kind Vegas and all that so Blackjack is kind Vegas and all that so Blackjack is kind of Gone by the wayside and I have a a of Gone by the wayside and I have a a of Gone by the wayside and I have a a bridge coach now who's former world bridge coach now who's former world bridge coach now who's former world champion Caltech grad and we play every champion Caltech grad and we play every champion Caltech grad and we play every week and I go to tournaments he's my week and I go to tournaments he's my week and I go to tournaments he's my partner that's been fantastic so I have partner that's been fantastic so I have partner that's been fantastic so I have a huge learning curve that I'm going a huge learning curve that I'm going a huge learning curve that I'm going through on bridge I have an even bigger through on bridge I have an even bigger through on bridge I have an even bigger learning curve I'm going through on Golf learning curve I'm going through on Golf learning curve I'm going through on Golf and then you know these two compounding
Questionerand then you know these two compounding and give back games these are going to go on for several decades that's great how how how good at Bridge was the the late great outstanding Mr Charlie Munger because you did play bridge with him quite quite a bit
QuestionerYeah so actually the it's very interesting about so Warren and Charlie both play bridge Warren is extremely serious about his Bridge he is Bridge partner is Sharon osberg she's a former world champion and Warren is a very good bridge player I've only played Bridge with Warren once and you know normally when you're playing bridge with someone it might take several years to build kind of an understanding and Convention so you understand kind of how each each of us play we was kind of accidentally playing together as partners online without ever having you know done even a 10minute conversation before so in the
Questioner10minute conversation before so in the chat window while we were playing I'm like pounding questions at him okay do you play this convention do you play that do you do this and you know he's responding to me uh yeah I do I play this I don't and you know so we were on the Fly trying to figure out how we're going to do this right and in the end my biggest concern was I'm going to screw up and he's going to be so disappointed okay so I was really focused on don't screw up Mish this is Warren Buffett don't screw up and I get a message and so first of all we did really well we whipped the opponents the funny thing about the opponents was they had no idea they were playing against Warren Buffett okay they just thought some guy online they had no idea what was his username do you remember at the time T-Bone okay and you know sounds so unlike
Questionerokay and you know sounds so unlike Warren right and you know Bill Gates's username on okay Bridge used to be username on okay Bridge used to be username on okay Bridge used to be Challenger okay and I think because there was a limitation of the number of letters you could have in your username it was c h a l NR or something and it was c h a l NR or something and it was c h a l NR or something and Buffett used to joke with him saying well you know you can't blame bridg The College Dropout he can't spell you know so that's you know that's he's just so that's you know that's he's just so that's you know that's he's just challenged that way you know so anyway so I played with Warren I thought we did so I played with Warren I thought we did so I played with Warren I thought we did okay and then you know 3 days after we okay and then you know 3 days after we okay and then you know 3 days after we finished playing now when we play online finished playing now when we play online finished playing now when we play online what happens is there's a record kept of what happens is there's a record kept of what happens is there's a record kept of every hand and everything that happened every hand and everything that happened every hand and everything that happened it's it's uh is there's an archive which it's it's uh is there's an archive which it's it's uh is there's an archive which archive you can go back to so I get a archive you can go back to so I get a archive you can go back to so I get a message from Warren's assistant Debbie message from Warren's assistant Debbie message from Warren's assistant Debbie she says hey you know Warren wanted me she says hey you know Warren wanted me she says hey you know Warren wanted me to reach out to you and let you know to reach out to you and let you know to reach out to you and let you know that he went back and looked at all the
Questionerthat he went back and looked at all the hands and everything that you guys played and he was very impressed with your play and I said you know the guy has got stuff to do you know he's got like you know 300,000 employees at that time and he's got you know like tens of billions of dollars to invest and all that and he's sitting around going through Bridge hands that he played with yo-yo monish okay and he's coming back to his assistant and saying hey send him a message doing this and doing that and all this stuff really funny anyway so so Warren is very serious about his Bridge Okay Charlie purely social bridge player Warren plays duplicate bridge which is very comparative Charlie doesn't play duplicate bridge he only plays social bridge and he couldn't be bothered about the conventions okay so the two of them are like night and day in terms of how
Warrenare like night and day in terms of how so for Charlie I was really surprised because Charlie is so serious about things in other things in life investing and this and that but Bridge it was like uh it's just just for social fun right and what I discovered when I sometimes I would play with Charlie as his partner and sometimes I would be his opponent right because in the club it would just switch around and what I discovered about Charlie was that while on the investing side he would never take a flyer or he would never you know go seat of the pants or or something it was very kind of regimented in playing bridge he was a gambler I mean he would take chances okay and I figured out that he Bluffs sometimes and you know so I used to catch him you know so sometimes he' bid he over bid and whatever and then you know i' double the contract and all that
Questionerknow i' double the contract and all that and you know he would be sweating trying to get it done and all that it was a lot of fun but it was just so so much fun it was like the two of them were Warren and Charlie are just night and day in terms of I mean they're identical as far as investing goes right but they're very different as far as Bridge goes y it's a lot of fun it's not really taught anymore it's not played do you recommend that kids today pick up Bridge like what skill sets come out of playing it anding is a game that takes 15 minutes to learn it's a very simple game to learn it cannot be mastered in a lifetime so if you started playing bridge when you were 10 years old and you played your whole life and you died at the page of 100 you would still be learning wow right because the the patterns and stuff there such a wide range of stuff which is what
Warrensuch a wide range of stuff which is what makes the game interesting is like you're never going it's like investing you're never going to get to a point in investing where you're going to say this is it I've plateaued out there's nothing more to learn I mean that's just not going to happen you could live a thousand years and that wouldn't happen you know so that's the kind of the fun part of a bridge now more bridge players die every year than new ones who take up the there are kids who are playing the game they tend to be mostly Asian kids you know I think is kind of placed to their math sensibilities or their tiger mom mothers but anyway unfortunate thing is that bridge is not number one on the list for young people which is unfortunate I think they would get a lot of joy and excitement out of it because it's a social game uh you're not looking
Questionerit's a social game uh you're not looking at a iPad or a screen all the time and I think it Bridge actually makes you a better investor it teaches you to think probabilistically I mean each each time a h a card is played the odds change and you have to recalculate right and so it's honing that muscle memory of probabilities because that's what investing is it's all of our probabilities so I started playing bridge a long time before I became an investor I just never actually thought that I'd be doing both things but I found later when I became an investor that the bridge playing actually helped me on the probabalistic thinking which is fantastic super interesting so I think most people who know you Mo if they've read your book The D investor but they probably don't know about your very first book Mosaic perspectives of investing I check every now and then and
Questionerinvesting I check every now and then and on Amazon have you have you gone to check with the prices right now for your first book Mosaic someone told me it's like 800 or something it's crazy it it's just CRA it's it's you know goes from 500 to 800 800 again um and obviously it's not in print it's hard to get what
OtherI've done because I tried to bring the price down what I've done is I put all the chapters of Mosaic as PDFs on my blog okay trai with PAB there's no login or anything it's free as you know Robin the best things in life are free you know and so if someone wanted to read the book they can just print off a bunch of PDFs and they don't need to pay even a dollar to Amazon and they they're fine but yeah some people like to have the physical book in their hands and then they're going to pay for that can we talk about your mental models how you
Questionerwe talk about your mental models how you approach the stock market monish I know you made this popular very early on but it's what you call cloning and is this something that you still implement in your investment strategy
Questionerwell I think cloning is for me like breathing yeah it's really fundamental I couldn't do what I do as an investor if I didn't have cloning as part of the DNA I think it's it's one of the most important models for investing I think that a lot of for some reason in probably going back to the evolution of our brains over the Millennia is I still don't know why but humans in general have an aversion to cloning they mostly think it's beneath them or they think it's something like cheating in some way but most humans either don't focus on cloning don't get it or just you know are indifferent to it but there's a small sliver of humans who
Questionerthere's a small sliver of humans who have gone all in on cloning in a very big way and those humans who've gone all in on cloning in a big way have ended up being some of the best entrepreneurs we've ever seen I mean the ultimate cloner was Sam Walton Sam Walton himself used to say that there is no human in history who's been through been on the inside of more retail stores which are not named Walmart than I have right so anytime Sam Walton went anywhere you know if he was going on vacation with his family they were passing some retail stor he'd stop the family stopped the car say I'll be back in 20 minutes okay and he'd go in and check the store out right and then and one time I remember there was a story I read one time some city in Brazil they call the paramedics because there's some old guy flat on the floor okay and they find out it's Sam
Otherokay and they find out it's Samokay and they find out it's Sam Walton and they find out that there'sWalton and they find out that there'sWalton and they find out that there's nothing wrong with him but he was tryingnothing wrong with him but he was tryingnothing wrong with him but he was trying to measure the space between the eyesto measure the space between the eyesto measure the space between the eyes you know how many feet was between theyou know how many feet was between theyou know how many feet was between the aisles he didn't have ruler with him oraisles he didn't have ruler with him oraisles he didn't have ruler with him or a tape measure so he laid his body downa tape measure so he laid his body downa tape measure so he laid his body down because he knew how tall he was then hebecause he knew how tall he was then hebecause he knew how tall he was then he could estimate because the space betweencould estimate because the space betweencould estimate because the space between the aisles for a retailer is criticalthe aisles for a retailer is criticalthe aisles for a retailer is critical that's square footage square footthat's square footage square footthat's square footage square foot efficiency you can't make it too closeefficiency you can't make it too closeefficiency you can't make it too close because humans are not going to likebecause humans are not going to likebecause humans are not going to like that and you can make it like the Fifththat and you can make it like the Fifththat and you can make it like the Fifth Avenue or something where you knowAvenue or something where you knowAvenue or something where you know you're going to then lose money becauseyou're going to then lose money becauseyou're going to then lose money because you're wasting square footage so youyou're wasting square footage so youyou're wasting square footage so you have to get that right right and so hehave to get that right right and so hehave to get that right right and so he was always looking at every minua aspectwas always looking at every minua aspectwas always looking at every minua aspect and you know sometimes he would go inand you know sometimes he would go inand you know sometimes he would go in with his management team into somewith his management team into somewith his management team into some retail store and one of his managersretail store and one of his managers
Questionerretail store and one of his managers would say well Sam that is such a useless operation it's like that that store was terrible and Sam would say to him yeah but did you see the candle display that candle display was awesome so he was not focused on whether the retailer was great or not or what mhm what he was focused on is what can I learn what can I learn from here even if it's a useless operator he so Sam always felt that if you talk to anyone you can learn in fact the group he like to talk to the most inside Walmart was the truckers oh okay so what he said is I would go into the Walmart Distribution Center at 58 a.m okay with donuts okay with donuts and coffee and he said I'd sit down with a half a dozen of the truckers right and he says that even without the donuts they are the most blunt and candid people on Earth they don't really have a filter I mean they
Otherdon't really have a filter I mean they don't really have a filter I mean they will tell you so he would ask them will tell you so he would ask them will tell you so he would ask them questions like okay you know so you visit all these Walmarts what do you notice so the guy will say well I went to this and this and I saw a lot of good product in the crash or I saw this and I saw these things were not being done properly you know say so real low down problems in Walmart his struckers would tell him and would cost him 10 bucks in Donuts so anyway so he was extracting stuff another phenomenal cloner is Bill Gates Right everything that has worked in Microsoft has been cloned and Microsoft has spent billions of dollars on R&D which for the most part has has yielded them nothing right so word came from word perfect and Excel came from Lotus and windows came from Apple and cloning and you know even now ai and everything nothing comes from inside you
Questionereverything nothing comes from inside you know the the browser search you knowknow the the browser search you knowknow the the browser search you know like Buffett used to say you know he helike Buffett used to say you know he helike Buffett used to say you know he he was telling me once do you know whatwas telling me once do you know whatwas telling me once do you know what Bing stands for he says but it's notBing stands for he says but it's notBing stands for he says but it's not Google it's really clever oh my GodI mean I think if you look at GreatI mean I think if you look at GreatI mean I think if you look at Great businessmen a number of greatbusinessmen a number of greatbusinessmen a number of great businessmen they're Shameless clonersbusinessmen they're Shameless clonersbusinessmen they're Shameless cloners yes and that's what I've tried to beyes and that's what I've tried to beyes and that's what I've tried to be I've tried to be the Shameless clonerI've tried to be the Shameless clonerI've tried to be the Shameless cloner and because I think that there are lotsand because I think that there are lotsand because I think that there are lots of smart investers who've done a lot ofof smart investers who've done a lot ofof smart investers who've done a lot of great work and if you can understandgreat work and if you can understandgreat work and if you can understand their thesis Etc you it's within yourtheir thesis Etc you it's within yourtheir thesis Etc you it's within your circle of competence it's going to becircle of competence it's going to becircle of competence it's going to be far better than trying to figure figurefar better than trying to figure figurefar better than trying to figure figure everything out on your own I mean eveneverything out on your own I mean eveneverything out on your own I mean even berkshire's Apple position came from oneberkshire's Apple position came from oneberkshire's Apple position came from one of the lieutenants H you know I meanof the lieutenants H you know I meanof the lieutenants H you know I mean Warren took the idea of from one of hisWarren took the idea of from one of hisWarren took the idea of from one of his two managers and of course he put 100two managers and of course he put 100two managers and of course he put 100 exra Capital that 50 extra Capital theyexra Capital that 50 extra Capital theyexra Capital that 50 extra Capital they put in right and went from there so yeah
Questionerput in right and went from there so yeah
QuestionerI mean I think cloning would give you a big Advantage it's challenging for some because you have to step outside of your own ego a lot of the time coming up with the idea yeah even daksh has only gotten success because we cloned a great model mhm the model that daksh follows is Way Beyond my pay grade I would never be able to come up with it you know just not that smart but it was already there and I could see it with a great model I couldn't come up with it but but I could appreciate the model and that's the same with some great investment ideas that I can't come up with them but if someone you know tells me about them I can tell this is exceptional going back to Sam w he was an incredible you know genius fanatic um I remember reading his b his autobiography I think everyone should go out and read it made in America there's
Questionerout and read it made in America there's a chapter this is years ago now I believe he wrote that he would hire um a helicopter to take him around cities to basically scout out sites for new Walmart locations so he was he was a pilot both him and Buddy Walt and his brother I think they were both pilots and Sam was spending a lot of time you know 10 12 14 15 hours driving because as Walmart was growing you know just and then he discovered that hey if I have a tiny plane it's going to be 45 minutes instead of like you know 7 hours or something and once he took to the skies that was I mean he was just Unstoppable yeah and so they would like you know drive down look at different sides they would see like two towns and they would see nothing in the middle of the Two Towns but they say hey if we put the Walmart in the middle of these two towns we'll pull from both of
Warrenthese two towns we'll pull from both of them right that's incredible and so I think for quite a few maybe the first 50 70 Walmarts it was all Sam Walton just flying around and it actually made him very efficient and I think he learned one thing that people don't appreciate about Walmart is Walmart embraced technology very early big time you know I mean if you think about the airplane as Tech technology or you think about computerss I mean they put in the amount of capex he put into IBM main frames very early when Walmart was the very small company they were way ahead because his managers told him we're not going to be able to run this place unless we automate we won't be able to run it and so he stepped up and invested big time that's incredible Vision so so so early on um the next mental model around Compounders um and how you scout out
QuestionerCompounders um and how you scout out Compounders I remember you you really brought to light uh the late investor Mr bresh in from India to the North American European market I had never heard from him I think no one did until you started talking about him but he had invested in that company Titan and that was just an incredible story I I I I believe You' bucket it into a compounder but how do you look at Compounders what criteria do you use to select these next up incoming companies
Todd Combsyeah so one of the things to keep in mind is that you really only truly understand a business after you own it I mean we may have an understanding that some businesses are great businesses before we own them because they're obvious like we can say MasterCard is a great business uh uh we could say you know Google is a great business and so on but for the most part most companies you're
Questionerfor the most part most companies you're going to really learn about them after you own them and what I have found is that the truly great Compounders it may take you a long time it may take you a few years of ownership to appreciate that this is the compounder so one thing to keep in mind is that in the early ' 7s late' 60s early '70s there was this concept of the nifty50 which is you bought these 50 totally Blue Chip stocks 2% of portfolio in each of them you didn't bother with valuations it didn't matter how expensive they were these were like you know Coke and Kodak and Polaroid and Xerox and you know Colgate Palmolive and all of that right uh McDonald's and so on so the idea was you buy these at with no price discipline and you hold them forever and life is great now the nifty50 in the crash of 7 7374 got taken out back and shot MH okay
Questioner7374 got taken out back and shot MH okay I mean there was no place to hide and itI mean there was no place to hide and itI mean there was no place to hide and it got decimated I mean that collapse ingot decimated I mean that collapse ingot decimated I mean that collapse in prices in 7374 or something cor was downprices in 7374 or something cor was downprices in 7374 or something cor was down to like six times earnings or somethingto like six times earnings or somethingto like six times earnings or something but you know there's some controversybut you know there's some controversybut you know there's some controversy whetherwhetherwhether Walmart was part of the nifty50 or notWalmart was part of the nifty50 or notWalmart was part of the nifty50 or not you know this one group that thinks ityou know this one group that thinks ityou know this one group that thinks it was one group that thinks it wasn'twas one group that thinks it wasn'twas one group that thinks it wasn't let's just assume it was part of thelet's just assume it was part of thelet's just assume it was part of the nifty 50 and let's assume that the niftynifty 50 and let's assume that the niftynifty 50 and let's assume that the nifty 50 was had a 2% weight in Walmart when50 was had a 2% weight in Walmart when50 was had a 2% weight in Walmart when Walmart had its IPO I think in 70 orWalmart had its IPO I think in 70 orWalmart had its IPO I think in 70 or 71 and let's say the other71 and let's say the other71 and let's say the other 98% went to Zero from then till now98% went to Zero from then till now98% went to Zero from then till now which is more than 50 years you wouldwhich is more than 50 years you wouldwhich is more than 50 years you would have blown out the S&P wow with ahave blown out the S&P wow with ahave blown out the S&P wow with a 98% zero portfolio going to zero 49 out98% zero portfolio going to zero 49 out98% zero portfolio going to zero 49 out of 50 bets not working you would stillof 50 bets not working you would stillof 50 bets not working you would still have beaten the S&P okay and there's ahave beaten the S&P okay and there's ahave beaten the S&P okay and there's a big lesson there and thebig lesson there and thebig lesson there and the lesson is first of all that investing islesson is first of all that investing islesson is first of all that investing is an extreme forgiving business in this
Questioneran extreme forgiving business in this case a 98% error rate has been forgiven okay the second is the key the absolute key to doing well is letting the great businesses stay in your portfolio so one of the mistakes I've made throughout my career is I've sold so many great businesses because of valuation one of the dumbest things you can do it took me a long time to figure out that that is extremely stupid so we had an investment in 2012 in Fiat Chrysler mhm at that time the market cap of fat Chrysler was about5 or6 billion and we had invested maybe 50 or 60 million in F Ka basically we had a 1% oh ownership of fear chist inside that 56 billion was 80% of Ferrari which today has a market cap of $90 billion okay so it was a very small part of fat Chrysler at that time in 2012 now it's 90 billion and if we had been so smart as to do nothing with it that'd be a $900
Questionerto do nothing with it that'd be a $900 million position for us wow okay I mean my total assets are a billion okay so we probably captured Maybe 150 million or something of value in a moment of Brilliance when we sold Ferrari because it looked expensive really stupid so if you look at the Walton family so Sam Walton had passed on all the shares of Walmart to his kids way before the IPO when it was just a nothing company and so in fact they paid no estate tax when he passed away because the shares were already owned by the kids mhm at the time of Walmart's IPO the Walton family had 38% of the business it's been like almost 55 years since that IPO there the family ownership of Walmart today is 44% well it's gone up okay it's you know what I'm saying in 55 years Sam Walton's been dead and gone for like a quarter Century or more I mean I think it's been
QuestionerCentury or more I mean I think it's been dead and gone for like 30 years it's been a long time okay and and there's no Waltons running the place okay there's a couple of them on the board it's the ultimate passive investment yeah and the thing is how brilliant is that right and they've basically increased increased ownership over that period which is awesome and they have this notion I think M mang should talk to me about it sometime he says Mish you only need to get rich once right so it's a mistake one of the things that took me a long time to learn several decades it's a mistake to try try to optimize compounding I tried to optimize the comp compounding and it blew up in my face actually what you really want to do is so when you when you say you know hold on to these Compounders well the answer is you may or may not know what is a compounder for
Questioneror may not know what is a compounder for some years after you've actually owned the stock it might take a while mhm the important thing is that once you do know that you have a compounder on your hands and that you have ownership you don't sell because of valuation so even it it looks expensive you don't sell you sell if there are truly secular declines so not wiggles or you know down quarter or some recession or something but true secular decline in the business and that might be a worthy reason to think about doing something else but other than that I think the thing is that buy to the notion you only need to get rich once yeah and you also bind to the notion that you know Monger you should say that in a life time you are not going to get too many trips to the pie counter okay and he said the key the key when you get to go to the pie counter is load up on a
Warrento go to the pie counter is load up on a lot of pie
Warrenokay that's czy the best and he says because the next time you go to the pie counter might be several decades later you're not going to so just load up and keep it right and almost every time I'd meet him he would go through with me kind of he would go through the kind of math going on in his head about his trips to the pie counter he wouldn't mention it each time but he would so he you know Mish the Monger family we have burshire we have CostCo we have lelu and now we have these apartment houses and he would I'd meet him after 3 months he would say the same thing okay I'd meet him again after 3 months he'd say the same thing because so he was going through in his head these were successful trips to the pie counter okay just keep on loading up on the Costco pie don't you don't need to mess with it just keep these pies and
Warrenmess with it just keep these pies and keep loading up on them and be very Discerning about and his view was well if there's no more trips to the pie counter that's perfectly fine and so we are not going to as humans get more than three or four trips to the p pie counter in a lifetime yeah and I already blew my one trip to the pie counter with Ferrari okay I mean if I look go back and look at the number of trips the pie counter have blown it's a long list okay so God has been benevolent giv me more than one time to try to make up for the stupidity I used to own a shipping company Frontline I think that I sold when it was a double in about like 8 months or something it ended up being like a 70x oh wow okay in about 3 years and and there was another trip to the pie counter that yours truly blue but the thing is that we had a few years back and I didn't think this was
Questioneryears back and I didn't think this was going to be a trip to the pie counter but it turned out to be a good trip which is this company in turkey called Ras Ras and now after having taken all the arrows in the back with Ferrari and others and listening to Charlie about the pie counter it's really simple we just hang on until we see the business going to hell we h on it's an incredible stock chart like I I I I do look at it it's like a brilliant perfect staircase like just just just going up over time and and you got in early I believe you got in was it four or five years ago
Otheryeah I think it's position's almost six years old yeah and at that time I think we had paid about $8 million for 1/3 of the company 8 million for 1/3 and there are so many doubters right they probably people saying like well at that time everyone in the brother was exiting
Questionereveryone in the brother was exiting turkey even now they're exiting turkey and I think that the market value of the business is over a billion billion one or something and probably liquidation value might be 2 billion might even be more than that and so from my point of view one of the simplest things to do is I mean it's still undervalued we we not even like have to scratch our heads like Ferrari hey it's 50 times trailing earnings what do you want to do here you know that actually gives you some room for pause here we're at a billion plus market value gone up like some 40x in the last six years in dollars and we're still undervalued yeah you know so very simple that was an incredible investment and then there's there's there's no more tasty pies right you keep on going back to the pie store but this is still the tast is obvious it's like no we have 30
Questionertast is obvious it's like no we have 30 years there might be a couple more trips to the pie counter I'm hoping there might be two or three more trips but what we have to do is that the on the pies we already have yeah we cannot let them go what I've learned is that at least what I've seen as my life experience is it's it's taken me five or six years to actually understand Ras they don't have an investor deck they don't really explain the business it took me about like six years to really and I'm still learning every time I go to Turkey I still get surprised about the business something that I didn't know or something you know because there there's very little data that's in the public domain about it I'm still learning on that front and what I've realized is that when you find that you have a great business with great economics with great
Questionerbusiness with great economics with great Management in your portfolio don't mess with it let it ride because we don't know which one of the 10 is the Walmart yeah right that's that's hard to tell in advance yeah but if you own them all you're going to be just fine
OtherI've heard Buffett say the same as it reflects on his 50 plus career as track record he says basically it comes down to a dozen you know private and public companies so profits made probably more than 400 or 500 investments in his 70-year career or 75 year career in investing and he said 12 move the needle and one of the 12 is the hiring of a chain and Munger used to say that the highest return Burkshire ever got on any investment was the search fee to hire a g chain they probably paid less than $100,000 to get Aid on board and he's probably created something like a couple
Questionerprobably created something like a couple of hundred billion dollars of value so what's the analyze compounding on that that's incredible that's an amazing Roi oh my goodness and and and then when it comes to the next mental model which is basically a punch card which Buffett and Munger have talked about extensively um your your philosophy monish on concentration has that evolved over time or do you believe the true path to wealth is a concentrated portfolio well
OtherI would say if you go back to our nifty50 example yeah what would end up happening in that scenario is that one position would end up going from 2% to 100% mhm right I mean if you look at the Walton family and we look at their degree of concentration it's pretty extreme they probably have a bunch of what Buffett would call helpers telling them they need to diversify thankfully they did not listen
Questionerdiversify thankfully they did not listen to the helpers who really are more interested in helping them El MH than helping you and so they paid no frictional costs they paid no taxes they've compounded like crazy which is great and that's awesome so a natural outcome of successful investing is you will end up extremely concentrated right and Burkshire hathway was a small part of Buffett's pie and it's almost the entire pie now it was very large portion of Munger pie I think it's a very natural outcome that as time goes on if you keep your winners the best winners are going to become 70 80 90% of your portfolio and very successful entrepreneurs are going to get very concentrated I mean I find the case of Steve bomber really interesting so I meet all kinds of like you know large fund managers Etc they hate the Steep bomber era of Microsoft okay if you look at the annualized
Questionerokay if you look at the annualized Returns on Microsoft stock when Steve bomber was the CEO it's like 4% a year or something i'' be less than that okay of course he it's not fair to him because he started out with a very elevated valuation and he ended up with a modest valuation when he handed the Reigns to SAA nadela but look at this I think his net worth exceeds Bill Gates is net worth that's incredible okay he's a yo-yo Bill Gates hired you know poker buddy you know and to his credit I think there was an article in Wall Street Journal a few few few weeks ago few months ago where they were talking about Steve balmer's investing prows and yeah I mean how smart was he I mean he understood Microsoft extremely well and didn't understand a lot of other things he said his whole portfolio is Microsoft in the S&P and of course he's got the
Questionerin the S&P and of course he's got the Clippers the LA Clippers right the S&P is a small part of the pie Microsoft's the you know 800B gorilla for him mhm so again in that case like this is a Hired Gun this is not a Founder you know he's a Hired Gun and he's a Hired Gun who in his own tenure didn't do that well but you know he put Satya in place yes genius and the rest is history as a kids would say balber just huddled right he just he stayed patient he didn't you know he's not really selling a lot of shares at all and as you said he's he surpassed Gates yeah in terms of wealth um when it comes to you know as you call it Uber cannibalism or share cannibals is that something that you still seek out in companies that you invest in
QuestionerI mean I think cannibals is a tremendous mental model I mean I think one of the reasons why the wal Walton family stake went up I don't think they
Questionerfamily stake went up I don't think they bought shares mhm I think it was I think they sold shares but I think that they've sold shares here and there for charity or whatever else but Walmart's bought back stock and so it's netted out that they're higher it's one of those things where when you do the math if you have ownership of a truly great business with great economics and that business is able to buy back shares at uh modest valuations I mean you know you don't have the tax leakage of dividends you have a lot of efficiency in how that uh is getting redeployed it's really going to add a lot of turbocharge to your portfolio so yeah I think like Monger used to say pay attention to the cannibals Y and I think yeah it's it's worth looking at businesses now you know the thing with cannibals is that Eddie Lampert bought back a lot of sear stock
QuestionerLampert bought back a lot of sear stock
Othermhm which was a great way to incinerate wealth we have to make sure that it's a great business mhm and we have to make sure that the buyback price is at least not overpaying and hopefully it's at a bargain price but if those two are true and you're an owner for a long time you're going to do extremely well
Questioneryeah um one very last quick question I'll make the best use of the time when what is your Bridge username online
Othermy my bridge username is extremely simple it's m awesome I don't have too much I don't have too much uh creativity I mean when I set set up the account that's what I set it up as yeah
Questionerawesome so that's okay and every once in a while I get fans uh you know oh are you Mish is this Mish blah blah blah whatever I said yeah sure let's play this has been a lot of fun thanks for the conversation I I I wish you the best 2025 thanks monish Rob and I look forward to all your videos so thank you so much appreciate it cheers