Other[Music][Music][Music][Music] Hello. Hello. Welcome to the moneyHello. Hello. Welcome to the moneyHello. Hello. Welcome to the money mindset. Now the guest on my show todaymindset. Now the guest on my show todaymindset. Now the guest on my show today is someone I've been chasing for a whileis someone I've been chasing for a whileis someone I've been chasing for a while and finally he's here. He's flown downand finally he's here. He's flown downand finally he's here. He's flown down to India and we have the chance to speakto India and we have the chance to speakto India and we have the chance to speak to him understand a lot about histo him understand a lot about histo him understand a lot about his journey. Mish Babri thank you so muchjourney. Mish Babri thank you so muchjourney. Mish Babri thank you so much for being here with us.
OtherWell great to befor being here with us. Well great to befor being here with us. Well great to be with you Sony I love the content you putwith you Sony I love the content you putwith you Sony I love the content you put out. So wonderful to be here. Thank you.out. So wonderful to be here. Thank you.out. So wonderful to be here. Thank you.
OtherYou know I've been following yourYou know I've been following yourYou know I've been following your journey for very long and it isjourney for very long and it isjourney for very long and it is inspiring. It is um uh I mean I aspireinspiring. It is um uh I mean I aspireinspiring. It is um uh I mean I aspire to be like you someday to be you know anto be like you someday to be you know anto be like you someday to be you know an investor, a businessman, ainvestor, a businessman, ainvestor, a businessman, a philanthrop doing all kinds of amazingphilanthrop doing all kinds of amazingphilanthrop doing all kinds of amazing work but there is this whole section ofwork but there is this whole section ofwork but there is this whole section of the younger generation that perhaps hasthe younger generation that perhaps hasthe younger generation that perhaps has not even heard of you. So today mynot even heard of you. So today mynot even heard of you. So today my endeavor is to um learn from you and toendeavor is to um learn from you and toendeavor is to um learn from you and to hear from you about your journey. Allhear from you about your journey. Allhear from you about your journey. All right. Well, let's get into it. So where
Questionerright. Well, let's get into it. So where do we begin? Wherever you'd like.
QuestionerSo, as I said, right, investor, businessman, philanthroper. Um, what best describes your journey?
WarrenWell, I would say probably what describes me best is like I had a couple of industrial psychologists do a bunch of tests on me now like maybe I think 26 years ago. And their conclusion was that he likes to play games. Even though it like you you put up all those different kind of words to describe me, I I would say probably the most accurate would be that I like to play games, but then they qualified that. They said that you like to play games, but you like to play games where you think you have some edge to win. And so you pick the games and you are a single player game player. So I'm not the kind of guy who would like to be on a soccer team for example. I'm more likely to want to play which I do
Othermore likely to want to play which I do play I play bridge for example right so play I play bridge for example right so play I play bridge for example right so more single player games and so more single player games and so more single player games and so basically when you look at like you know basically when you look at like you know basically when you look at like you know the dua foundation we have you know I the dua foundation we have you know I the dua foundation we have you know I describe it as a game right and I even describe it as a game right and I even describe it as a game right and I even if I look at papriay funds I describe if I look at papriay funds I describe if I look at papriay funds I describe that as a game so these are all games that as a game so these are all games that as a game so these are all games and at the end of the day I've always and at the end of the day I've always and at the end of the day I've always felt that life for the most part doesn't felt that life for the most part doesn't felt that life for the most part doesn't have a lot of meaning you know we're have a lot of meaning you know we're have a lot of meaning you know we're randomly here on some blue dot and we're randomly here on some blue dot and we're randomly here on some blue dot and we're here for some time then we're gone on here for some time then we're gone on here for some time then we're gone on we're here for a relatively short period we're here for a relatively short period we're here for a relatively short period of time. So I try to make the most of it of time. So I try to make the most of it of time. So I try to make the most of it in that time and try to have the most in that time and try to have the most in that time and try to have the most fun. So that's how I kind of process it. fun. So that's how I kind of process it. fun. So that's how I kind of process it.
QuestionerWow. This became philosophical very soon. I I was hoping this would happen a soon. I I was hoping this would happen a soon. I I was hoping this would happen a little later on the show, but I'm glad little later on the show, but I'm glad little later on the show, but I'm glad you brought that up because you know I you brought that up because you know I you brought that up because you know I mean for you whatever you've touched has
Questionermean for you whatever you've touched has worked really well, right? whether it's PBR funds, whether it's your association with Warren Buffett, Charlie Mer and over the years you've had sort of a ringside view on their life, their journey. Um, tell us a little bit about that. I mean, how did you begin and when did you kind of first meet them? What was your association with them? And what has your biggest learning been from them?
OtherWell, first of all, I would just clarify there's been a lot of things that didn't work, right? So, even though you're pointing out there some things have worked. So I've tried many things in life. Usually when I'm trying something new it's small right? So if something is small then it tends to be contained. If it's showing traction then I can you know kind of press on the accelerator. So there's been many
Otheraccelerator. So there's been many endeavors that I've had which have not worked. And in fact the ones that don't work are the most important ones because they are the ones that actually teach you. the ones that do work don't teach you anything. So I always cherish the failures. So that's worked out well. And I think in many ways I feel like Forest Gump, right? So we are not supposed to be able to touch Warren and Charlie. We're not supposed to be able to be friends with them. And you know there these you know big icons and you know larger than life and all of that. But somehow I became friends with Charlie and I'm I'm not as good friends with Warren but I have reasonable friends with Warren as well that's not supposed to happen you know so just these kind of weird things happen and I take it as it comes and no complaints about it and it's been wonderful actually because
Questionerit's been wonderful actually because it's enhanced the journey it's helped me become a better person and it's been wonderful. So, I remember in 2008 when I started my career, I read this article about you um sort of paying $650,000 with with someone else together to have lunch with Warren Buffett. And at that point, I was I mean the of course the amount was large at that point in time, but I was just so um amazed to uh to hear about that because people don't do it and of course it's a huge opportunity if you do get to have lunch with him. So tell us a little bit about that.
QuestionerYeah. So I would just say this. So let's say if you lived at the in the time of Gandhi or Newton or Einstein and if there was an opportunity to meet them for a meal, would you take that opportunity? Right? So for me, Warren Buffett would be in the same genre. You know, not quite Gandhi, but
Ted Weschlergenre. You know, not quite Gandhi, but you know, he's the capitalist and Gandhi is not. And unlike those guys, Warren is not. And unlike those guys, Warren every year was willing to take a bribe to have lunch with anyone, right? So he would run a charity lunch auction. And the way I looked at it is that I think I was trying to win the lunch from like 2004 onwards. So just kept not being the highest bidder. But you know if at that time I think in 2007 probably more than 70 million of my net worth was directly attributable to learnings I got from Warren. So my perspective was you know I've gotten all these learnings I've never paid any tuition bill. What kind of tuition bill makes sense? And I thought, well, you know, if you pay 2 or 3% as a tuition bill, that's pretty cheap. I don't think it's that much. You know, GST is a lot more than that, you know. So, so my take was why would I not
Ted Weschlerknow. So, so my take was why would I not want to pay that tuition? And I felt like here was an opportunity to actually thank my hero in person. And not only do I get to thank him, but I get to break bread with him and such. So I said, "Okay, we're going to bid for this and see if we can win this." And as it turns out from what transpired after that, it was like buy one lunch and get infinite lunches free because it led to a friendship with Charlie Mer. I used to meet Charlie every probably couple of months for dinner. I became a bridge partner of his and used to play bridge with him, the LA Country Club. So all of these things were kind of just really surprising for me. I never expected any of it. And so when I look back, yeah, that was a total no-brainer and worked out great.
QuestionerWow. What exactly happened at that lunch? Well, so one of the things
Ted Weschlerthat lunch? Well, so one of the things that Warren does when he because he does these lunches every year, he's now stopped. The last lunch he did, I think went for 26 million. So I got a great deal in hindsight. And there's no more lunches. So he's he's he's done with those. So Warren's, you know, Warren's perspective that is that whenever anyone has won this lunch, they should at the end of the lunch feel that they got a bargain and they should feel this was tremendous. So he tries to do everything possible to make it an incredible experience for whoever's won the lunch. And the way it works is the rules are that you can come, you can bring up to six other friends with you, friends or family, whoever you want. And he told us when we started to sit down, that I've got nothing going on all afternoon. So he said that I'm here as long as you
Questionerhe said that I'm here as long as you want me. When you get sick and tired of me, you let me know and I'll leave. But there's no clock or anything. And I had gone with my family. So my daughters were 10 and 12 at the time which is a great age actually. They both sat on either side of Warren you know they were they were sitting on both sides of him and then my friend Guy Spear came with his wife. So there they were six of us and Warren had the time of my time of his life with my with my daughters and basically it was lucky that they were at that age because they were just old enough that they could comprehend a lot and he gave them a lot of pointers and in fact he gave them advice that they still remember and understand till today. So, for example, he told them that the most important decision they're ever going to make in their life is who they decide to marry. And that stuck
Otherthey decide to marry. And that stuck with them, you know, so it's not something I had to talk to them about. That was already done when they were 10 and 12. And so, why did he say that? I think for women, it's a make or break. I mean, I think who your partner is going to make a massive difference in terms of the eventual outcome. So and and he I mean he he knows that I mean it applies to men too but I think it applies much more to women and you know a lot of women will make that decision with a lot of emotion right you kind of need a balance of heart and head you know and so that's what is missing a lot of times it's too much heart too little head and so that balance is important otherwise you're going to kind of go off track and then it takes a while to get back on track so yeah he just had a great advice and then any any question we would ask
Questionerand then any any question we would ask him, he does this even at the Burkshire meetings. He converts these lemon questions into lemonade, you know. So you ask him some question that's maybe not that great or whatever, but he his answer will convert it like can you tell us something that well like for example in the early 60s there were actually three of them who did deals together or had some collaborations. It was Warren, Charlie, and a third guy named Rick Goran. And Rick Goran kind of disappeared basically for the most part in the early '7s. So I said, "Okay, there were three of them." And then it just became two of them, right? And I didn't know what happened to Rick. So I asked Warren, I said, "Warren, you know, you and Charlie did all these different deals with Rick. What happened to Rick? Are you in touch with Rick? And how's he
QuestionerAre you in touch with Rick? And how's he doing, etc.
WarrenAnd it was just a question I asked him just it was just a curiosity. I didn't have any agenda with that question. So he said, "Well, Rick and I are still in touch. We play bridge online." He just sent me a Christmas card and very much alive and doing well and all of that. But then he continued, he said that Charlie and I knew very early that we would get very rich, but we were not in a hurry to get rich. He said Rick was in a hurry. So he said that Rick was a very good investor and still is a very good investor, but at that time he was using a lot of leverage, right? So he actually had margin loans and in 7374 there was a huge draw down in the US markets. So Warren said that Rick got margin calls and he was forced to sell his position. So Warren said that Warren bought Rick's Berkshire stock at $20 a
Questionerbought Rick's Berkshire stock at $20 a share which was the price at that time.share which was the price at that time.share which was the price at that time. It had fallen from 40 toIt had fallen from 40 toIt had fallen from 40 to 20. Those shares are now worth 700,000 a20. Those shares are now worth 700,000 a20. Those shares are now worth 700,000 a piece, right? US dollars. So it wentpiece, right? US dollars. So it wentpiece, right? US dollars. So it went from 20, it'sfrom 20, it'sfrom 20, it's 35,000x since then, right? And then he35,000x since then, right? And then he35,000x since then, right? And then he continued further. He said that ifcontinued further. He said that ifcontinued further. He said that if you're even a slightly above averageyou're even a slightly above averageyou're even a slightly above average investor and you spend less than youinvestor and you spend less than youinvestor and you spend less than you earn and you use no leverage, you cannotearn and you use no leverage, you cannotearn and you use no leverage, you cannot help but get rich over a lifetime.help but get rich over a lifetime.help but get rich over a lifetime. Right? So I mean, how simple is that,Right? So I mean, how simple is that,Right? So I mean, how simple is that, right? And he converted a question I hadright? And he converted a question I hadright? And he converted a question I had about Rick. I was just trying to figureabout Rick. I was just trying to figureabout Rick. I was just trying to figure out what happened to Rick and heout what happened to Rick and heout what happened to Rick and he converted it into a into a life lessonconverted it into a into a life lessonconverted it into a into a life lesson into a leverage and then later whatinto a leverage and then later whatinto a leverage and then later what happened is that when I started playinghappened is that when I started playinghappened is that when I started playing bridge with Charlie Rick was one of hisbridge with Charlie Rick was one of hisbridge with Charlie Rick was one of his bridge buddies and his his buddy forbridge buddies and his his buddy forbridge buddies and his his buddy for since then so I got to know Rick reallysince then so I got to know Rick reallysince then so I got to know Rick really well and he passed away a few years agowell and he passed away a few years agowell and he passed away a few years ago just wonderful guy and so it just came
Questionerjust wonderful guy and so it just came full circle and it was great. So I think that's what Buffett did is that he would just look at any question or anything we were asking and he'd answer it in a way that would try to deliver a lesson. So two lessons that stayed with me in this one is don't take leverage. It's really not required. And the second is um you know I guess you just have to do the basics if you want to kind of get rich which is you know use the power of compounding and you know start your investment journey early. What else what else did he talk to you about that you know what I'm just trying to understand what are the five or six things that you need to follow if you want to become a successful investor. Well, so one of the things he talked about was this concept of the inner scorecard versus the outer scorecard. So he
Warrenscorecard. So he said, "Do you want to be known as the best lover in the world, but internally know that you're the worst? Or do you want to be known as the worst lover in the world, but internally internally know that you're the best?" and he said if you know how to answer that question you're very far along towards being a success. So the inner scorecard is a veryveryvery powerful framework to use which is that the way we ought to measure ourselves is by the inner scorecard. So we shouldn't really look at the way the world looks at us because the world doesn't know about all the flaws and warts and everything else we do, right? And that's really the benchmark to use. And so if you use the proper scorecard to measure yourself, you're going to end up being a better person and a better life. The other thing he was saying is that he said like, you know, if you hang
Questionerthat he said like, you know, if you hang out with people better than you, you're going to get better. If you hang out with people worse than you, you're going to get worse. So there's a gravitational pull both ways. And so most humans are not going to be willing to put this framework ahead of loyalties. But in order to have a great life, you actually need to be and this is not Warren's word but my words which is you need to be a harsh grader of humans. So what you have to focus on is that when you do an assessment of your friends, you're going to find that they are in a whole spectrum, right? And you have to take deliberate action to increase time with the ones that are exceptional and decrease or even eliminate the ones who are who've got issues or whatever where they're pulling you down in some way. And that is a difficult thing for many
QuestionerAnd that is a difficult thing for many humans, right? Because it goes against the principle of loyalty. But I would say the principle of hanging out with people better than you, in my opinion, trumps the loyalty. If your objective is to you know go as far as you can in life and have the best possible life and have the happiest life. So the thing with life is that we constantly get to forks in the road right and you know which fork are you going to take and so if you have these frameworks then I think those forks become they become really simple. So talking about the inner scorecard, right? If you do figure out the hack of not letting the outside world affect you and having your own internal mechanism where you'd rather prefer being called not the best lover outside but knowing that you're the best lover inside. You figured that hack out. Yes. What does
Questionerfigured that hack out. Yes. What does that actually mean? I mean, how do you take that forward into your professional journey?
OtherWell, that inner scorecard is going to form the baseline for growth because you don't have illusions, you know, based on what people think, you know, who you are and what what you are. You internally know where you're at. And then you can make a kind of a rational assessment of, okay, this is who I am. This is what my strengths and weaknesses are. and I can do XYZ to play the game of life in a wonderful way, right? And so having the reality of who you are and where you are is just very fundamental and not having that polluted by what people say like you know we when we started talking you brought up some of the things I've done well but I'm more concerned with the things that haven't worked right because those are actually the relevant ones. We
Otherthose are actually the relevant ones. We don't want to sweep them under a rug. It's easy to sweep them under a rug. I think but those are the ones that are truly going to teach you M right so what I've always found this is interesting about life it's really amazing how this has worked there was a Roman emperor Marcus Aurelius so the first gladiator movie Marcus Aurelius shows up in the first 5 minutes you know the old king and he had a very difficult life so he spent his whole life on the battlefield lot of injuries a lot of sicknesses really tough life and over the course of his life he came up with a philosophy And it's called the Stoic philosophy and he wrote this book meditations right so if you just kind of boil you know Orurelius down to the core he says that to encounter misfortune and overcome it is good fortune. So what he's saying is
Questioneris good fortune. So what he's saying isis good fortune. So what he's saying is that whenever we encounter adversity youthat whenever we encounter adversity youthat whenever we encounter adversity you know at the time we are facing theknow at the time we are facing theknow at the time we are facing the adversity we feel terrible like oh whyadversity we feel terrible like oh whyadversity we feel terrible like oh why is this happening to me this is so sois this happening to me this is so sois this happening to me this is so so bad whatever else but what he's actuallybad whatever else but what he's actuallybad whatever else but what he's actually saying is that particular adversity oncesaying is that particular adversity oncesaying is that particular adversity once you've gone past and overcome it it isyou've gone past and overcome it it isyou've gone past and overcome it it is that adversity that's going to lead tothat adversity that's going to lead tothat adversity that's going to lead to greater growth and what I found whichgreater growth and what I found whichgreater growth and what I found which when I look back you know I'm going towhen I look back you know I'm going towhen I look back you know I'm going to be 61 this year when I look back therebe 61 this year when I look back therebe 61 this year when I look back there has never been a case in my life there'shas never been a case in my life there'shas never been a case in my life there's been lots of adversity there's neverbeen lots of adversity there's neverbeen lots of adversity there's never been a case in my life where any ofbeen a case in my life where any ofbeen a case in my life where any of those adverse things did not lead tothose adverse things did not lead tothose adverse things did not lead to greater growth I cannot even point togreater growth I cannot even point togreater growth I cannot even point to it's it's stunning you know I wouldit's it's stunning you know I wouldit's it's stunning you know I would think that there'll be some exceptionsthink that there'll be some exceptionsthink that there'll be some exceptions to this rule because when I and so theto this rule because when I and so theto this rule because when I and so the interesting thing about that is so ifinteresting thing about that is so ifinteresting thing about that is so if you flip that on its head and now whatyou flip that on its head and now what
Otheryou flip that on its head and now what happens is that when I hit challenges or adversity I'm actually smiling through it. It's like I'm like kind of observing it and saying, "Okay, yeah, yeah, I know I'm going through this. I know this is a bunch of nonsense to it, but I know what's going to happen on the other end. I don't know how and why and when that will happen on the other end that I'll get some fruits from all of this, but I know it's never failed me. So why get so in some ways we should welcome adversity." But there is this uh difference between having a scarcity and an abundance mindset, right? in every way. So when you talk about adversity, when people are hit with adversity, if you have a scarcity mindset, you generally have a victim complex as well and then you get get sort of sunk into that. How does one move from a scarcity to an abundance
Questionermove from a scarcity to an abundance mindset in all fields of life, whether it's, you know, in investing, whether it's in your personal life, in your professional journey? Not easy. I mean I think like I said to me I think the hack I use is knowing what or A or A or A or A or A or A or A or A or A or A or A or A or A or A or A or A or A or Aurelius said knowing what Marcus Aurelius said knowing that this has actually transpired in 20 different ways in my life in the past and knowing that it transpired in his life in different ways. So it's just I think faith faith is a big part of this that you have to have the faith that the sun will rise tomorrow and you will rise with the sun and tomorrow will get better than today and the day after will get better than the day tomorrow and so on. So I think you have to have faith and you have to put one foot in front of the other. So a good piece of that
Otherthe other. So a good piece of that adversity is that you have to confront it headed head on. So you shouldn't like you know draw the covers and withdraw. You have to confront it and face it strongly and that's what's going to help you overcome and that's what's going to help you get the best growth out of it. So basically the the beautiful thing about that philosophy is there's never downside in life because if things are going well that's fine. everything's fine and things are not going well that's even better. I want to talk about that because if you believe that there's never a downside in life now when you extend that to say you know making money or investing right you do go through several phases and you have been investing for maybe 30 40 years now I'm sure you've seen draw downs of 30% 40% at some point in your investing journey now that is a clear
Questionerinvesting journey now that is a clear downside you can see it in your portfolio what do you do at such a time and I'm asking because we are in this phase in the Indian markets as well when we are seeing or sort of the onset of a bare market perhaps. Um how do you hack that? A long time ago we were told if wealth is lost nothing is lost. If health is lost something is lost and if character is lost everything is lost.
QuestionerYou're just starting. You're just talking about the first one. The first one the saying is if wealth is lost nothing is lost. So we don't need to worry about the wealth part. Now it's a little different in India but in the US my father-in-law passed away and when he used to visit us in the US he used to say the US is the only country in the world where the poor people are fat. Okay. So if you see a beggar on a street in Mumbai and if the beggar is fat,
Otherin Mumbai and if the beggar is fat,in Mumbai and if the beggar is fat, okay, first of all, we've never seenokay, first of all, we've never seenokay, first of all, we've never seen such a site, right? It's rare. Okay. Butsuch a site, right? It's rare. Okay. Butsuch a site, right? It's rare. Okay. But but if you saw a fat beggar on a streetbut if you saw a fat beggar on a streetbut if you saw a fat beggar on a street in Mumbai, nobody will give that personin Mumbai, nobody will give that personin Mumbai, nobody will give that person any money. They'll just look and say,any money. They'll just look and say,any money. They'll just look and say, why is he begging? He's already so fat.why is he begging? He's already so fat.why is he begging? He's already so fat. He should not be eating food. Okay. SoHe should not be eating food. Okay. SoHe should not be eating food. Okay. So basically what so what my father want tobasically what so what my father want tobasically what so what my father want to say in in the US the poor people are fatsay in in the US the poor people are fatsay in in the US the poor people are fat which is probably true. If you dowhich is probably true. If you dowhich is probably true. If you do analysis you might find that the caloricanalysis you might find that the caloricanalysis you might find that the caloric intake amongst the lower end of theintake amongst the lower end of theintake amongst the lower end of the population might be higher. The reasonpopulation might be higher. The reasonpopulation might be higher. The reason for that is that the US has a safety netfor that is that the US has a safety netfor that is that the US has a safety net right so we do have a homeless problemright so we do have a homeless problemright so we do have a homeless problem in the US. It's a small portion of thein the US. It's a small portion of thein the US. It's a small portion of the population. I think probably well underpopulation. I think probably well underpopulation. I think probably well under a quarter% of the entire country.a quarter% of the entire country.a quarter% of the entire country. Most of them have issues with mentalMost of them have issues with mentalMost of them have issues with mental health or drug abuse, right? So if youhealth or drug abuse, right? So if youhealth or drug abuse, right? So if you take that out, it may be even muchtake that out, it may be even much
Othertake that out, it may be even much smaller number. So what I tell people is that if you lose your job for example, you're not going to starve because the statistics in the US is the poor people are fat. Okay? you're not going to basic because the safety nets are there and so there's a baseline and things will take care of themselves. Even in India when I was growing up my parents were very poor financial planners. My dad went bankrupt several times as an entrepreneur and they never had any savings and we had to rely on friends and family even for groceries and rent and things. It was it was tough times but at the end you know you pull through and move on right. So you never came from a from a family of wealth. Well there were periods of time when we had wealth and there were periods of time when there was nothing. So there was a it was a big roller coaster you
Questionerwas a it was a big roller coaster you know. So when my dad was an excellent guy at figuring out business opportunities, starting businesses but he was very aggressive in terms of wanting to grow it as fast as possible. a lot of leverage and such and so these things would blow up with some regularity and so it was feast of famine and because they never say when things were going well they were living well they were spending well everything was going going well and then it would just crash and go the other way so one of the lessons I took from that when I was an adult myself is we're going to have like 15% like when I started working 15% going into my 401k my retirement plan we're going to keep that and we're going continue to build on that so we're never going to have this type of situation you know so we look at that and we learn and
Questionerknow so we look at that and we learn and take it from there so I think with the Indian markets you know the markets going down so if you study equity markets around the world and I'm the most familiar with the US market so I'll just give a US market example is from 1965 to 1982 major index the Dow was flat So it was 865 in 1965 and it was 865 in 1982. 17 years zero right then from 82 to 99 it went from 865 to like 12,000 exponential growth. I mean like you know everyone was double digit doing extremely well and then from 1999 to 2012 zero right now from 65 to 82 the US economy grew a lot and a lot of good things happened some bad things happened but a lot of good things happened. What happened is in 1965 stocks were very overvalued and in 1982 they were extremely undervalued. I mean you could buy Coke for seven times earnings, Proctor and Gamble for six or seven
QuestionerProctor and Gamble for six or seven times earnings. It was everything was very cheap. Everything was on sale. In 99 it again got overvalued. And if we go back to and we look at the Sensex and we go back even we don't even go that far. go since let's say ' 91 when they started doing the reforms last 35 years you will find long stretches where the Sensex is zero and you will find also some long stretches or even maybe not that long stretches where it's doing 20% a year 18% a year but when you average it out it's had a tremendous run right and so I think the important thing to understand is that for most investors they are not going to be able to figure out how to value a business. The good news is you don't need to figure out how to value a business. So you buy a low cost broad index fund and you dollar cost average into it or rupee cost
Othercost average into it or rupee cost average with the SIP every month. Put some savings in and you don't worry about the markets going up and down. You keep that plan. Now this is not what most people are going to do right this is what I do. So yeah but I have long long back I stopped you know worrying about investing in direct stocks and a large chunk of my money is in index funds because I've realized when you average it over a period of time you can never call the market so just leave it to professional fund management. And the thing is you keep your frictional cost down and basically the good news is that the index is too dumb to know that it owns Google and it's too dumb to ever sell it. Okay. So it will hold Google for 30 40 years which an individual investor is going to not do. They're going to dance in and out of Google right and the same thing here. I mean
Questionerright and the same thing here. I mean it's going to own Asian PES for a long time and HDFC for a long time and Titan for a long time and all of that. Right? the index is just going to own those things because it doesn't bounce in and out. But there's an argument here, right? I mean, if you you said Asian Paints, HTFC Bank, these are stocks that have really not given any returns to investors despite being amazing companies in for some time three, four, five years, right? Very short period.
QuestionerYes. So, uh it's a short period. I agree in a time span of in a journey of 30 40 years.
QuestionerLike I was talking to Romesh Damani the other day and he said Sonia you will make money in mutual funds in SIPs but you will be able to create real wealth when you identify stocks on your own.
QuestionerYeah but let me give you a counterpoint. So you know we have the nifty in India.
QuestionerSo you know we have the nifty in India. We had a little different Nifty in the US in the early '7s late60s called the Nifty50 at that time which is not to be confused with the Indian Nifty50. These were 50 ultra blue chip high-flying stocks. And at that time, the theory was you don't worry about how expensive they are. You don't worry about anything. They're such strong businesses. You just blindly put 2% of assets into each one and leave it alone. Now, there is some controversy whether Walmart was part of that nifty50 or not. Right? Let's just take the case that Walmart was one of those 50 stocks, right? And it would have been 2% weightage of the entire index when you first started. And let's say now a lot of the nifty50 stocks from that time, they included companies like Xerox, Polaroid, Kodak, these have gone to zero. A lot of them have gone to
Questionerto zero. A lot of them have gone to zero. If you take the entire Nifty50 and take 49 of the 50 to zero and you only leave Walmart, the 2% and you run it till today, it beats the S&P, it's a solid double-digit return with 90 98% of the portfolio taken to zero. Okay. So, what is the lesson there? Now let's I know it's not an Indian example but I'll just I'll just give you a little bit of so Walmart when it went public Sam Walton already had transferred the shares to his family. So the Walton family at the time Walmart went public owned 36% of the company. Okay at the IPO Sam Walton has been dead for I think 35 years. There are no Waltons who are in management in Walmart at senior levels or anything. There may be one or two on the board. Today, the Walton family stake in Walmart is 44%. It's 50 years after the IPO, more than 50 years. It's 55 years after the IPO.
Questioner50 years. It's 55 years after the IPO. 55 years after the IPO, the family's ownership in Walmart is higher than it was at that time, okay? 55 years ago. And they've done extremely well. They're very wealthy and all of that, right? So what the index does for you is it will keep Walmart forever for you. It will keep Asian Paints forever for you and you don't need to worry about it. And what the index is also going to do, it will take out Xerox and it will take out Kodak. So every year one or two of the losers will go away and they won't get it right always. But we we don't need. So in that particular example, you only needed to hold Walmart at a 2% weightage in your portfolio 50 years ago and just not touch it and everything was fine. Right? So the single most important skill that an investor needs is patience. So if you are the kind of
Otherpatience. So if you are the kind of person who loves to watch paint dry, you will do extremely well as an investor. If you get anxious watching paint dry, it's not going to work well. So like for example, HTFC, Asian Paints, now for people like me who value stocks, they were ridiculously over overvalued. I don't even know if they're currently fairly valued. They may be overvalued, but but they are exceptional businesses. I wrote an article I think in 2001 or 2002 maybe it was 2000 where I pointed out how overvalued Infosys was. Infosys was really ridiculously overvalued at that time in 2001 and for a long time eight or nine years the returns to investors were zero. But if you ignored Monish and you just held Infosys from then till now, you did extremely well. It got past the over valuation. The business kept growing and improving and it's worked out very well.
Questionerimproving and it's worked out very well. I had the same issue with Microsoft. Microsoft from 2000 to 2012 the returns were zero for 12 years. 12 years zero returns. Okay. It wasn't just zero. It went from a 600 million market cap. 600 Yeah, 600 million market cap. No, 600 billion market cap, sorry. To less than 200 billion. So it wasn't just flatline. It was serious draw down and then coming back up. But for 12 years, if you just held for 12 years, you were zero, which is not a great result. And there's an opportunity cost as well. There's an opportunity cost. But again, if you just held Microsoft from 2000 till today, it's not great, but you had about a 56x. Okay, you still had a 56. That's great. Well, 56 for an average investor. 56x is 25 years is not that great. It's okay. But what I'm saying is that Microsoft was one of
Charliewas one of the most overpriced companies. It was the most overpriced companies. It was one of the best companies at that time in 2000, but it was very overpriced. So it is in the nature of equities that they are going to get get into some periods when they get severely overvalued. There'll also be periods when they get severely undervalued and there are periods when they may be normal. It's all of the above, right? And if you are a no nothing investor, buy the index. What's a no nothing investor? a know nothing investor who doesn't know whether a stock is oh no okay okay overvalued undervalued whatever who has no time to research and and so but I'm just saying if the the no nothing investor just buys the index and you know the next HTFC or the next Asian pays is in there we just don't know which one it is but it's in there and you just let it stay in that index for
Questioneryou just let it stay in that index for 30 40 years and life is going to be great so you know I was uh watching an interview that you did recently where you were talking about Warren Buffett and Charlie Munger's style of investing and in that you said one of the most important decisions you make is not the stock you buy but it is how to not sell that stock. So basically watching the paint dry. Do you still believe in today's disruptive world that once you buy a good company you hold it in perpetuity I mean or whatever your time frame is or you do you need to keep evaluating every five six years.
OtherI think the interesting thing about that particular statistic is that there are some businesses which have great modes and great cultures and we have a lot of history with these businesses where they've been around for decades 50 years 75 years even beyond right and I think
Questioner75 years even beyond right and I think that so if you were a stock picker obviously you want to be able to ride that business for as long as the fundamentals are in place and the question that comes up is what is a signal and what is noise right we have to separate the signal from the noise and what a investor is better off doing is be having a heavy bias towards thinking everything is noise so when you get to irrefutable declines so I would say that in general if you bought a business fairly priced or underpriced, selling it just because it became overpriced, if it's a very highquality business may not be the most prudent thing. But if that business goes into what is obviously secular decline, then you you have to get off the bus. So you want to give me some examples like for now if you had bought say Nvidia 3 years ago, four years ago, I mean is
Questioneryears ago, four years ago, I mean is this a good time to be selling? Should you hold names like Tesla? Everyone's talking about Palunteer and you know the kind of growth that we're seeing there. So how do you deal with some of these names that are you know kind of frenzied or buzzwords?
OtherSo 99% of stocks should go into what Buffett calls the too hard pile. Okay. So there's actually a box on Buffett's desk which says too hard on it. Okay. Okay. And he actually has a like a like a box where you can put papers in which says too hard. Okay. When I went to his office, I saw that box and I said, "Warren, the box is empty." So he said, "Monish, it's not supposed to be empty." So he took a bunch of papers and dumped it on the in the box and said, "See, it's full now." Okay. So he was just he was just kidding with me. But basically, if you ask me,
Questionerwith me. But basically, if you ask me, okay, so what does Nvidia look like 5 years from now or 10 years from now? It goes in the two hard pile. It's not a question I need to answer. Right? So I only need to answer that question if I going to make an investment in Nvidia. And so let's take Nvidia as an example. So you know there's a lot of buzz about it, right? The question I would have asked investors to ask themselves is tell me what you think Nvidia's cash flows are going to be 5 years from now, 10 years from now, 15 years from now. If you know these numbers with high conviction, then the next question which is should you buy or sell Nvidia becomes obvious, right? because you can look at those cash flows and decide the stock is too expensive or too cheap or whatever and make that decision. I don't know what Nvidia's cash flow is going to be 5
Questionerwhat Nvidia's cash flow is going to be 5 years from now or 10 years from now, 15years from now or 10 years from now, 15years from now or 10 years from now, 15 years from now. Too hard pile. Palanteeryears from now. Too hard pile. Palanteeryears from now. Too hard pile. Palanteer too hard pile. What was the other onetoo hard pile. What was the other onetoo hard pile. What was the other one you said?
WarrenTesla. Tesla definitely tooyou said? Tesla. Tesla definitely tooyou said? Tesla. Tesla definitely too hard pile. What I'm saying is it's ahard pile. What I'm saying is it's ahard pile. What I'm saying is it's a it's it's a tremendous company. It'sit's it's a tremendous company. It'sit's it's a tremendous company. It's done great. the valuation doesn't makedone great. the valuation doesn't makedone great. the valuation doesn't make sense based on current cash flows but wesense based on current cash flows but wesense based on current cash flows but we have Elon who's not human you know and Ihave Elon who's not human you know and Ihave Elon who's not human you know and I mean Elon is constantly underestimatedmean Elon is constantly underestimatedmean Elon is constantly underestimated by everyone I mean now he's fixing theby everyone I mean now he's fixing theby everyone I mean now he's fixing the US that's incredible so it would fall inUS that's incredible so it would fall inUS that's incredible so it would fall in a two hard pile and so so what whata two hard pile and so so what whata two hard pile and so so what what falls in the other pile what are thefalls in the other pile what are thefalls in the other pile what are the stocks that are lowhanging fruits yeahstocks that are lowhanging fruits yeahstocks that are lowhanging fruits yeah so basically the good news withso basically the good news withso basically the good news with investing is globally there are 50,000investing is globally there are 50,000investing is globally there are 50,000 or more stocks we can do extremely wellor more stocks we can do extremely wellor more stocks we can do extremely well if we knew nothing about 99.9% of themif we knew nothing about 99.9% of themif we knew nothing about 99.9% of them we would still have few hundred stockswe would still have few hundred stockswe would still have few hundred stocks to look at that we could actually thinkto look at that we could actually thinkto look at that we could actually think about so if if we just use the simple
Questionerabout so if if we just use the simple framework that I don't want to take risk I don't want to make bets where I'm making some assumptions on cash flow where I don't have high conviction with 50,000 stocks You can get whatever you want delivered to you on a platter if you're flexible. So for example, 6 years ago, I started making trips to Turkey, right? And I started going to Turkey because it was screening extremely cheap as a market. It was screening as the most the cheapest market in the world. And I also went there because I have a good friend there who's kind of diehard Ben Graham type deep value investor. He's I think he's now like the second largest fund manager in Turkey and he was much smaller then. And I told him listen I'd like to come to Istanbul and if you're okay with it I'd love to visit the companies in your portfolio. And he
Questionerthe companies in your portfolio. And he said oh that'd be a lot of fun. Why don't you come? So I said here are the rules. Don't take me to see any businesses where you don't have money invested right and I want to start with the business where you have the most conviction the highest stake out of the portfolio you manage and then work our way down right he said yeah fine no problem right so when I started visiting these companies in Turkey there was the currency were very unstable inflation was extremely high and all the foreign investors were running to the exits mass panic extreme panic So I focused on businesses where the currency is not relevant. So there are some businesses which I'll get to in a second where inflation and currencies don't matter because it'll kind of work itself out. And the second thing that I did is when I visited there is I did no work on
QuestionerI visited there is I did no work on these companies. I decided I would do these companies. I decided I would do these companies. I decided I would do work on these companies after I met work on these companies after I met work on these companies after I met them. I said at least let me meet them, them. I said at least let me meet them, them. I said at least let me meet them, know a little bit about them, then I'll know a little bit about them, then I'll know a little bit about them, then I'll do the work. So on my second visit in do the work. So on my second visit in do the work. So on my second visit in 2019 whenever we were driving to a 2019 whenever we were driving to a 2019 whenever we were driving to a company I would start asking my friend company I would start asking my friend company I would start asking my friend Haider questions okay who what's the Haider questions okay who what's the Haider questions okay who what's the company who are they and what's the company who are they and what's the company who are they and what's the market cap what do they do and all that market cap what do they do and all that market cap what do they do and all that right I'm just trying to kind of right I'm just trying to kind of right I'm just trying to kind of understand just basics I said once we understand just basics I said once we understand just basics I said once we meet then I'll do the work so he said oh meet then I'll do the work so he said oh meet then I'll do the work so he said oh monish this company we're going to meet monish this company we're going to meet monish this company we're going to meet a company called RAS its market cap is a company called RAS its market cap is a company called RAS its market cap is $16 million $16 million $16 million US16 liquidation value is $800 million US16 liquidation value is $800 million US16 liquidation value is $800 million and They run a bunch of they rent out and They run a bunch of they rent out and They run a bunch of they rent out warehouses to like Fortune 500 warehouses to like Fortune 500 warehouses to like Fortune 500 companies. So I said, "It's trading at companies. So I said, "It's trading at companies. So I said, "It's trading at 2% of value. Is it a fraud?" So he said, 2% of value. Is it a fraud?" So he said, 2% of value. Is it a fraud?" So he said, "No, I have money in it. It's not a "No, I have money in it. It's not a
OtherNo, I have money in it. It's not a fraud.
OtherI said, "Why is this? Why is it fraud."
OtherI said, "Why is this? Why is it fraud."
OtherI said, "Why is this? Why is it so cheap?"
OtherHe said, "It's Turkey. so cheap?"
OtherHe said, "It's Turkey. so cheap?"
OtherHe said, "It's Turkey. Everything is cheap."
OtherSo I visited the Everything is cheap." So I visited the Everything is cheap." So I visited the father and son who run the company. And father and son who run the company. And father and son who run the company. And then I spent the afternoon visiting then I spent the afternoon visiting then I spent the afternoon visiting their warehouses. And you could have their warehouses. And you could have their warehouses. And you could have gone to any broker. They had like 60 gone to any broker. They had like 60 gone to any broker. They had like 60 properties. And you could have just said properties. And you could have just said properties. And you could have just said okay these are the properties what is okay these are the properties what is okay these are the properties what is the value the brokers would have tell the value the brokers would have tell the value the brokers would have tell you told you the value of these you told you the value of these you told you the value of these properties is1 billion US there was 200 properties is1 billion US there was 200 properties is1 billion US there was 200 million of debt and the liquidation million of debt and the liquidation million of debt and the liquidation value of that business was 800 million value of that business was 800 million value of that business was 800 million so then I thought 16 million there's so then I thought 16 million there's so then I thought 16 million there's going to be no stock to buy it's illquid going to be no stock to buy it's illquid going to be no stock to buy it's illquid for $8 million I got one/ird of the for $8 million I got one/ird of the for $8 million I got one/ird of the company which we still own today the company which we still own today the company which we still own today the market cap now is over a billion wow And market cap now is over a billion wow And market cap now is over a billion wow And the currency has collapsed like when I the currency has collapsed like when I the currency has collapsed like when I invested at that time it was five liter invested at that time it was five liter invested at that time it was five liter to the dollar. It's now 36 liter to the
Otherto the dollar. It's now 36 liter to the dollar. Yeah. It's so in lera our dollar. Yeah. It's so in lera our dollar. Yeah. It's so in lera our returns are infinite. Okay. I don't even calculate what is it in lra. But in calculate what is it in lra. But in calculate what is it in lra. But in dollars that market cap went from 16 dollars that market cap went from 16 dollars that market cap went from 16 million to a billion. But now the million to a billion. But now the million to a billion. But now the liquidation value of that business is liquidation value of that business is liquidation value of that business is more than 2 billion. So they've actually more than 2 billion. So they've actually more than 2 billion. So they've actually increased the value of the business. increased the value of the business. increased the value of the business. What do they do? They rent out large What do they do? They rent out large What do they do? They rent out large warehouses. So IKEA, Amazon, Carour, warehouses. So IKEA, Amazon, Carour, warehouses. So IKEA, Amazon, Carour, Toyota, Mercedes, all of these people Toyota, Mercedes, all of these people Toyota, Mercedes, all of these people have rented. So it's a very boring, have rented. So it's a very boring, have rented. So it's a very boring, simple business. It was just extremely simple business. It was just extremely simple business. It was just extremely mispriced. Templeton Funds at that time mispriced. Templeton Funds at that time mispriced. Templeton Funds at that time in 2019 sold me 5% of the company for $1 in 2019 sold me 5% of the company for $1 in 2019 sold me 5% of the company for $1 million. Okay. Because someone in New million. Okay. Because someone in New million. Okay. Because someone in New York told him, "Exit Turkey." Right? So York told him, "Exit Turkey." Right? So York told him, "Exit Turkey." Right? So what I discovered is that I was just what I discovered is that I was just what I discovered is that I was just buying the business. I didn't do a lot buying the business. I didn't do a lot buying the business. I didn't do a lot of work then because the value gap was of work then because the value gap was of work then because the value gap was so large that I didn't really need to so large that I didn't really need to so large that I didn't really need to understand a lot more detail about it.
Otherunderstand a lot more detail about it. Over the years I met them several times and I studied the business more and what I discovered is that it's not just a cheap asset. They were very good capital allocators. They were very creative. They had entered a number of different businesses and they had always ended up being number one number two market share. So this business basically is a business that we will not sell. The funds will not sell this business. We will sell when the founders sell. Okay. Okay. When I meet the founders, I meet them once a year. I tell them this company Rayas is my family business. I'm not in the management. I'm not on the board. I don't have any say in the business. I don't want any say in the business. You guys keep running it the way you want because if you get me involved, it'll be worse. And I don't have to do anything. That's the other
Otherhave to do anything. That's the other beautiful thing about public equity investing. You have to do no heavy lifting. You don't need to run the business or any of that. And you don't need too many of these in a lifetime, right? So if you end up chalib say that you're going to get a trip to the pie counter very few times in your life when you go to the pie counter you have to load up on a lot of piec okay and because you're not going to get too many trips to the pie counter so when you look at a business like Nvidia the question you ask yourself is is this a trip to the pie counter and the answer is 3 trillion market cap I don't think so okay because for it to be a trip to the pie counter that 3 trillion market cap needs to go to 100 trillion. Okay. 100 trillion is a really big number. Yeah. Okay. It exceeds the market cap of the entire United States market. Okay.
Otherthe entire United States market. Okay.the entire United States market. Okay. And definitely many times the IndianAnd definitely many times the IndianAnd definitely many times the Indian market. So we don't have any businessesmarket. So we don't have any businessesmarket. So we don't have any businesses like that. So basically because we deallike that. So basically because we deallike that. So basically because we deal in auction-driven markets. So thinkin auction-driven markets. So thinkin auction-driven markets. So think about it this way. You go to watch aabout it this way. You go to watch aabout it this way. You go to watch a movie, okay? or you go to watch a playmovie, okay? or you go to watch a playmovie, okay? or you go to watch a play and there are certain rules in thisand there are certain rules in thisand there are certain rules in this theater. Every seat has to be occupied.theater. Every seat has to be occupied.theater. Every seat has to be occupied. Okay. So now you you bought a ticket toOkay. So now you you bought a ticket toOkay. So now you you bought a ticket to watch a play and you're you've got yourwatch a play and you're you've got yourwatch a play and you're you've got your seat. You paid $50 for your ticket andseat. You paid $50 for your ticket andseat. You paid $50 for your ticket and you're watching the play. There's someyou're watching the play. There's someyou're watching the play. There's some smoke in one corner of the theater andsmoke in one corner of the theater andsmoke in one corner of the theater and the fire alarm has gone off. Everyone isthe fire alarm has gone off. Everyone isthe fire alarm has gone off. Everyone is rushing to the exit. This theater hasrushing to the exit. This theater hasrushing to the exit. This theater has special rules.special rules.special rules. You can only leave your seat if somebodyYou can only leave your seat if somebodyYou can only leave your seat if somebody else takes it. So you paid $50 for thatelse takes it. So you paid $50 for thatelse takes it. So you paid $50 for that seat. How much do you think somebodyseat. How much do you think somebodyseat. How much do you think somebody would pay you to take that seat? Notwould pay you to take that seat? Notwould pay you to take that seat? Not $50. Not even $1. Yeah. Because now they$50. Not even $1. Yeah. Because now they$50. Not even $1. Yeah. Because now they smoke. They smoke. So that is the stock
Othersmoke. They smoke. So that is the stock market because every share has to be owned by someone. So if a company goes through any kind of temporary distress and the investors run to the exit, somebody else is buying those shares and going into the theater, right? Because they they have the same information. They have the same information and saying, "Oh, you're running out of the theater. Don't worry, I'm going to go in. The smoke doesn't really bother me. I'm okay." Okay. So we are looking for theaters where there is an illusion of smoke, not real smoke, an illusion of smoke. And many times the smoke will be real. We don't need to go there. But every once in a while there will be illusionary smoke. So reason I went to Turkey was that I my sense was that when you have mass exodus going on in the theater, the baby's going to get thrown
Othertheater, the baby's going to get thrown out of the bathwater, right? I mean there a lot of good things will go away with bad things. So we have I think at this point I only have two businesses in Turkey in my portfolio and something like 60 or 65% of the portfolio is Turkey. And I told my investors that we are not going to sell these businesses. They can sell their stake in the funds to bring down concentration but we're not selling right and because trips to the pie counter are few and far between. I am never I'm pretty sure till I pass away I will not find another business at 2% of liquidation value. Right? That that happened only once in my life. One and done. But for every investor in the market, there will be a few times in your life when you will clearly see that this is a glaring bargain, great opportunity. You have to keep your eyes and ears open for
Questionerhave to keep your eyes and ears open for and you have to do it in size at that time. So Buffett says when it's raining gold, don't put out a thimble. Put out like a big bucket. Bucket. Yeah, big bucket, not a spoon. Correct. That's so So you have to c you have to capture those moments. Okay. This has been uh like a master class in investing and in life lessons. So you started the conversation by saying that life has no meaning. Tell me more about that.
OtherWell, I mean if you if you uh it's not really my philosophy. I think this would be a lot of religions would get to that in the sense that you know we are circling a mediocre star on a mediocre planet in a mediocre galaxy in the middle of nowhere actually closer to the edge of the universe. So the fact that somehow consciousness was created life was created and consciousness was created is
Othercreated and consciousness was created is an unusual event that took place but wean unusual event that took place but wean unusual event that took place but we have to put it in context. You know thehave to put it in context. You know thehave to put it in context. You know the thing is we are here for a short timething is we are here for a short timething is we are here for a short time and a lot of randomness in life andand a lot of randomness in life andand a lot of randomness in life and there isn't really I don't think there'sthere isn't really I don't think there'sthere isn't really I don't think there's a grand plan you know in the sense thata grand plan you know in the sense thata grand plan you know in the sense that I think that a lot of this is just theI think that a lot of this is just theI think that a lot of this is just the way things happened. So if life has noway things happened. So if life has noway things happened. So if life has no meaning then why do people chase fame,meaning then why do people chase fame,meaning then why do people chase fame, money, success, they haven't thoughtmoney, success, they haven't thoughtmoney, success, they haven't thought about it enough.about it enough.about it enough. So in my thinking of it and I thinkSo in my thinking of it and I thinkSo in my thinking of it and I think that's why I became a game player in mythat's why I became a game player in mythat's why I became a game player in my thinking whatthinking whatthinking what what that basically so not much meaningwhat that basically so not much meaningwhat that basically so not much meaning in life you try to leave the earth ain life you try to leave the earth ain life you try to leave the earth a better place than you found it. you trybetter place than you found it. you trybetter place than you found it. you try to improve it in some way so that theto improve it in some way so that theto improve it in some way so that the future generations have a little betterfuture generations have a little betterfuture generations have a little better time and then I feel like okay to passtime and then I feel like okay to passtime and then I feel like okay to pass the time just do interesting things thatthe time just do interesting things thatthe time just do interesting things that you're excited about and I'm excitedyou're excited about and I'm excitedyou're excited about and I'm excited about playing games right so that's kind
Otherabout playing games right so that's kind of how I approach things it works for me but I think each person is built differently so they can figure out the first the first I would say the first step would be whether you agree or disagree with the meaninglessness of life right if you if you agree with it then the next step would be well how do you give it meaning right how do you make it so that it becomes a fun time in the brief time that we're here so when you say playing games do you mean that everything you do is like a game for you and that's how why you enjoy it because you you don't attach any outcome to it well no the outcomes are important because games games have outcomes and outcomes are relevant scores are relevant but what I mean by the games is that so for example I think it's a big advantage antage to know when you're
Otheradvantage antage to know when you're going to die, right? In my case, I'm going to die on June 11th, 204, right? Little less than 30 years. How do you know that? So, if you go on a website like let's say Metife, which is a insurance company, you answer about 15 questions, they will tell you your life expectancy. Now, I added some bells and whistles to it. I said okay my birthday is June 12th maybe I'll just go one day before my birthday so it's a kind of round number how many years right so instead of saying 204 I can say June 11 204 make it more precise and so the two games I'm playing that are relevant to that date is I have one engine that makes money creates wealth and I have a second engine duana which gives the wealth away and what I want to accomplish with this game is that one day before I die June 10th there should be like $10,000 left right so the
Otherbe like $10,000 left right so the compounding engine will hopefully keep generating a lot of wealth and the give back engine which is now about 16 17 years needs to scale up over time and also give it away and I don't want to just give it away I want to give it away in a way where it does the most good for society on the compounding side also I want to try to to play the game the best way I can to try to increase the value for my investor than me the the best I can with the lowest risk and so to me the reason it's a game is I could have retired when I was like 33 right from then till now all the wealth that's been created is not going to be consumed by me or my family it's really going to go back to society in some way so in effect from then that point onwards It's really abstract. It's not really it's it's there. It's kind of like and this is a
Questionerthere. It's kind of like and this is a lot of Buffett influence where he also says the the money he has cannot make him happier by spending it. Whatever happiness he can get by spending money he's already spending but 99.999% of his wealth cannot help him become happier. He's already very happy and so it will go to other uses and causes and that's fine. So I think that
QuestionerYeah. So you start with meaningless then you say okay let's play games that we enjoy. So if beyond a point money doesn't give you happiness why do people keep chasing more and more wealth? I think that when you start asking these questions so if you go to the or you know you talk to the sages living in the Himalayas you know who've given up everything and whatever else like let's say someone like Karmahansa Yogaandanda Swami Viveanand and all these guys in my opinion they got to some of
Questionerguys in my opinion they got to some of the highest levels of evolution for humans they transcended for the most part they transcended the physical, right? They figured out material things are not going to lead to greater happiness. There were other things that were going to lead them to greater happiness and they pursued that path. Someone like me cannot be as evolved as them. I'm very far away from that, but I can make some the more I more try to get there. The more we go towards that, the greater the satisfaction we're going to get. So I think a lot of people just don't think about it. Like for example, it's very clear to me that I don't want to have multiple homes. Okay. It's also very clear to Warren Buffett that he doesn't want to have multiple homes. He feels that multiple homes just creates more work and issues and whatever else. If I
Otherwork and issues and whatever else. If I have to go someplace, take a hotel room or whatever and it's fine. It's to me it's easier. I have friends who have multiple homes and you know they live that life and they enjoy that life and you know more power to them. So but what I've always found is that less is more. It's a journey towards detachment basically. Not so much detachment. I would say I can't I'm never going to get detached like the way the swamies are. But I think that I always ask myself that if I'm going to do X or going to go to X place or meet X person whatever is that going to make me happier or not right I always use that as a benchmark and in fact if I meet someone for lunch right or meet someone for tea or whatever I always do a postmortem after that I say okay that was that happened do we want to repeat that did we like that did we not like
Otherthat did we like that did we not likethat did we like that did we not like that and what what ends up happening isthat and what what ends up happening isthat and what what ends up happening is that you binnow it down to set of peoplethat you binnow it down to set of peoplethat you binnow it down to set of people that you truly enjoy spending time withthat you truly enjoy spending time withthat you truly enjoy spending time with and you have a lot of satisfaction andand you have a lot of satisfaction andand you have a lot of satisfaction and kind of commonality and whatever elsekind of commonality and whatever elsekind of commonality and whatever else and you go from there so I'd say less isand you go from there so I'd say less isand you go from there so I'd say less is more a lot of people just don't thinkmore a lot of people just don't thinkmore a lot of people just don't think about it and a lot of influences thatabout it and a lot of influences thatabout it and a lot of influences that come on people you know you have mediacome on people you know you have mediacome on people you know you have media and advertising and all these thingsand advertising and all these thingsand advertising and all these things telling you what you should want and howtelling you what you should want and howtelling you what you should want and how you should live and what kind of lifeyou should live and what kind of lifeyou should live and what kind of life you should want you should always wantyou should want you should always wantyou should want you should always want much bigger homes, you should alwaysmuch bigger homes, you should alwaysmuch bigger homes, you should always have much better cars, you should, youhave much better cars, you should, youhave much better cars, you should, you know, have great vacation. So, Iknow, have great vacation. So, Iknow, have great vacation. So, I actually feel like I'm on vacation everyactually feel like I'm on vacation everyactually feel like I'm on vacation every day, right? I many times I feel like ifday, right? I many times I feel like ifday, right? I many times I feel like if I go away someplace, it's worse thanI go away someplace, it's worse thanI go away someplace, it's worse than just my daily life. You've hacked it,just my daily life. You've hacked it,just my daily life. You've hacked it, Mon. You've really hacked it.Mon. You've really hacked it.
QuestionerMon. You've really hacked it. It's not so much about the money you've made, but it's about the mindset that you have sort of gained over time, right?
OtherYeah. But but I think if you just think about you know what and again it it it dovetales with the inner scorecard because you're not looking at what will people think right we're completely disregarding what people think we just focus on what is going to work better for us and less better for us and just do it that way.
QuestionerWow. Okay. That's interesting. It's very interesting actually. I mean I think what really stayed with me is of course the inner scorecard and when you know both you and Warren Buffett think that beyond a point money doesn't really buy you happiness. So in a sense you know try to sort of give back to society in every way but if you had to distill all the learnings that you've had in this amazing life of
Questionerthat you've had in this amazing life of yours where you started with say your you know parents becoming bankrupt and then you went on to compound your money phenomenally well and you know get into different markets and build wealth for yourself. If you had to distill this entire journey in two or three key life lessons what would it be?
WarrenI think the important thing is one of the most important things is to know yourself and that's not easy because we don't come with the owner's manual right so understanding who we are what we like what we dislike what we are good at what we're not good at then I think it's a pursuit of passion so if you have a job the question to ask yourself is would I do this job if I was getting paid right and the answer is no it's the wrong job right so on a daily basis is what you are spending time on should really be
Questionerare spending time on should really be something that is a passion. But do you think you can say that now because you come from a place of privilege because for a lot of people jobs are a means to an end and despite not having passion they still have to pay their bills and put food on the table. Right.
QuestionerSo actually it's it's a great point and I'll I'll just give you know just dissect that a little bit for you. So when I was 25, I was working at a company at making like $40,000 a year and I knew that I was not fully satisfied with what I was doing with them and I had an idea of a business and what I was doing is I was working on that business while I was working at the company. So what I used to do is I didn't have any money so I I used to work like 6:00 in the morning to about 9:00 on the business. Then when I'd come back in the evening at 6:00 till about
Otherback in the evening at 6:00 till about midnight, I'd work. And then on the weekends, I'd work on the business. And then if I had client meetings or something, I would take like a half a vacation day or one vacation day and meet them. And I did this for 9 months. And after 9 months, this was the third startup I had. The first two never went anywhere. I lost maybe $2,000 and they went away. But the third startup, this is one. After 9 months, I had a few clients and I could see there was enough cash flow that it was slightly above my salary, right? And I was dying to do it full-time, right? I I said if I can just do 70 hours of it and give up my job, but if I was going to leave my job and do that, I only had a guarantee or even a pseudo guarantee of that cash flow about for about three or four months, right? So all I knew if I left is that
Ted Weschlerright? So all I knew if I left is that there is 4 months of like work and contracts and all that and after that it's an unknown right but I used two or three kind of data points and principles the first thing I said is okay I researched US bankruptcy law at that time when I was going and it basically said that okay if you basically become personally bankrupt because I had taken I had applied for every credit card I could yet. So, I had $70,000 of credit card limits I had not yet used. I had 30,000 in my 401k that I had not yet used. I knew that once I left the paycheck would stop and this money would start getting used. So, I knew at some point there would be 70,000 of debt. So, my question was that okay, if the business fails and I have to go back and take a job, what do I do with the debt? Right? and I researched that I can declare bankruptcy, personal bankruptcy,
Questionerdeclare bankruptcy, personal bankruptcy, declare bankruptcy, personal bankruptcy, and it would be wiped clean and I get to and it would be wiped clean and I get to and it would be wiped clean and I get to start over. So, I said, "Okay, that's start over. So, I said, "Okay, that's start over. So, I said, "Okay, that's good." And I said, "Okay, I I'm good." And I said, "Okay, I I'm good." And I said, "Okay, I I'm qualified and probably in a month or two qualified and probably in a month or two qualified and probably in a month or two I can get a job." So, I said, "Okay, I can get a job." So, I said, "Okay, I can get a job." So, I said, "Okay, we're going to just go for this. This is we're going to just go for this. This is we're going to just go for this. This is I'm single. We have a shot and we're I'm single. We have a shot and we're I'm single. We have a shot and we're going to take the shot." Risk, right? We going to take the shot." Risk, right? We going to take the shot." Risk, right? We took the I didn't see it as risk. took the I didn't see it as risk. took the I didn't see it as risk. Actually, entrepreneurs don't take risk. Actually, entrepreneurs don't take risk. Actually, entrepreneurs don't take risk. I saw it as pretty low risk because I I saw it as pretty low risk because I I saw it as pretty low risk because I felt like right. So I go in to resign to my like right. So I go in to resign to my like right. So I go in to resign to my job my my boss and his boss and I tell job my my boss and his boss and I tell job my my boss and his boss and I tell them I got this company I formed it's them I got this company I formed it's them I got this company I formed it's not competitive with you in any way and not competitive with you in any way and not competitive with you in any way and I'm going to go work on that. So they I'm going to go work on that. So they I'm going to go work on that. So they said to me, "When it fails, not if it said to me, "When it fails, not if it said to me, "When it fails, not if it fails. When it fails. When it fails. When it fails, please come back, we'll give you fails, please come back, we'll give you fails, please come back, we'll give you more money, we'll give you a promotion, more money, we'll give you a promotion, more money, we'll give you a promotion, and you don't need to look for another and you don't need to look for another and you don't need to look for another job." So I said, "This is actually
Otherjob." So I said, "This is actually better than I thought because the day it fails, I'm back to where I was. You have a backup plan, right?" And so I said, "Okay, this is even better than I thought because I won't lose one or two months looking for a job or something. I'm back, right?" So I said, "Okay, great." And both of them later joined my fund. Okay. Because they saw I never came back. Right. So that that business that business took off. But basically so you know when you're saying that I'm in a certain place when I made the decision to pursue my passion. There really wasn't a big safety net. You know what I'm saying? I just I just knew that there was a few things going on, which is what most entrepreneurs have. they don't have a lot they can hang their hat on when they're going for it. And if it didn't work, I knew what the plan B was.
Otherdidn't work, I knew what the plan B was. And basically what I would have done, so let's say if it didn't work, go back to work, come up with some other idea, mornings, evenings, keep doing this one more shot, right? Make some savings and go again. So that's what I would have done, but it just worked and then I never had to look back from there. Oh wow. I don't think you're ever going to be in a situation where, you know, unless you're born with a silver spoon or whatever, but that you can just jump into something without really taking some some risk. Some risk and some challenge. But I thought the risk was low, but it was calculated in a way. It was a calculated risk. Yeah. And that's one of the things about entrepreneurs is that non-vententure-backed entrepreneurs actually don't take risk. They're really careful about this stuff. And it's not
Othercareful about this stuff. And it's not just me because they think about these things carefully. And I knew that I had a degree. I had a qualifications. There were a lot of people who would want my skills. So I knew all that. So I knew that it's not going to be like there's nothing you know but and I also knew that I was not yet married. There were no kids and therefore it was an easier decision. Yeah. So lesser responsibilities. Absolutely. Okay. So let's wind down now and you know I mean from your vantage point since you've had this amazing journey where you've had access to some of the best brightest minds in the investing world what is your definition of a life well-lived?
OtherWell I think a life well-lived is you leave planet earth better than you found it. It's really important to be a good parent. I think that one of the biggest
Otherparent. I think that one of the biggest responsibilities we have is we in a position to have a huge influence on some very impressionable lives. So I think there is no substitute or anything for good parenting. So you have to be a great parent. No matter what else is going on you have to be a great parent. And then beyond that I think you know pursue your passion. Do the best you can. And when you say great parent what is the definition of a great parent?
QuestionerBecause I'm a parent as well. So I I I would I would love you know some advice on that front considering it is a very very tricky time right now when you have you know toddlers and sort of children who are all over the place. So as what would your definition be of I mean I think you know it's a mess right I mean the thing is I think the thing is that it's chaos you know like I think Mike Tyson says you know everyone has a plan
QuestionerTyson says you know everyone has a plan till they get hit in the face. So we're not going to have a plan with kids. But I think in general just being conscientious and understanding that you've got these very impressionable lives and that you're responsible for them. You have to do the best you can for them. You have to help them. So one of the things for example that I had read a book I think just before my daughters became teenagers called the hidden logic of teenagers. Right? So one of the most important influences for kids after the age of 10 or 12 or so your yours might be younger is who their friends are. So we end up not having much influence fairly early in their lives. Even after 12 or 13 we actually don't have much influence. What we have to do is we have to control without them knowing that we're controlling who their
Questionerknowing that we're controlling who their friends are. And so if you want to control who their friends are, you have to first understand who their friends are. So you do some hacks and some tricks. One is open your house anytime for pizza for everyone. Okay? Or volunteer to ride them and their friends anywhere. So what happens is when you're in the car, I actually didn't believe this when they said this in the book. They said that when you drive with teenagers in your car, don't speak. Be absolutely silent. In about three minutes, they'll forget that you're in the car and they'll start talking as if as if you are not there. Second thing the guy said is no matter what you what you hear, don't respond because then they'll know you're in the car. So your job at that point is data gathering. Just observe and you will be shocked at the data you're gathering in those car
Otherthe data you're gathering in those car rides. So those type of things will tell you whether your kids have the right friends or not. In the case of my younger daughter, she was in this art school. She was very artistic and all that. She was in art school and we realized that there was a big problem with her best friend. There was a whole I mean it was just really a can of worms. And I realized that if we tried to to try to tell her to break it off, it wouldn't work. you know, she would it it just wouldn't work. So, what we decided was that we were going to change the school. And when we told her that she was going to we're going to change the school, violent protest against that, like really like, you know, she thought we were villains, you know, but we we knew that there was no choice there. We just didn't have a choice there. And so, we
Otherdidn't have a choice there. And so, we said, "Okay, we're going to have crazy couple of weeks. Some hard decisions have to be." and and it worked. It actually you know obviously her friend circle changed but with teenagers I think the who their friends are really really important and so and so you will have to spend enough time with the friends to get to know them. The other thing about teenagers another hack is if you want to talk to them about anything after midnight. Okay so basically their energy levels and their body clocks are different from ours. After midnight, they're more amenable to accepting receptive what you are going to tell them. If you try it at 10:00 a.m., that's not going to work. Okay. Some you got some advanced warning. And I have some time left before all of this hits me. But Monish, it was such a pleasure speaking to you. Thank you so
Questionerpleasure speaking to you. Thank you so much for taking the time out. And I'm truly honored to have you sit here with me and spend so much time with me because time is so important as we've been discussing and the kind of people that you meet. But thank you so much once again. It was a pleasure. Thank you. And I'm going to see you on Omaha for sure. That be great. Great. Sounds good. Thank you for being on the money mindset. All right. Thank you.
Other[Music]