Other[Music][Music][Music] good evening everybody uh on behalf of the finance and investment cell at SRI Ram College of Commerce uh I extend a warm greeting to each and every one of you and thank you so much for joining us today for yet another thought-provoking speaker session organized by the finance and investment cell of srcc today we are absolutely thrilled to have Mr Mish pabra as our esteemed speaker a very warm welcome to you sir uh we also welcome our esteemed faculty adviser Dr s ji and thank her for her unwavering support in all our endeavors Visionary in finance and philanthropy sir has an audacious entrepreneurial Spirit he has founded several successful companies and Pioneer the mongor Buffett Focus value investing approach he's the founder and managing partner of P investment funds and manages over $500 million in assets yet the impact he has
Othermillion in assets yet the impact he has created extends Beyond Finance being the founder and chairman of the Dua Foundation he's transformed the lives of thousands of E economically and socially disadvantaged but gifted students worldwide by providing them with world-class educational opportunities having mastered the art of balanced living He cherishes family literature and the Strategic complexities of duplicate brid being someone who carries the pursuit of excellence and the power to create lasting change it is our utmost pleasure to be able to learn from your wisdom sir we are honored to have you and this honestly feels extremely seral for all of us and just want to put it out there please do excuse us if our questions are maybe redundant or if they seem like childish Curiosities uh a order for the audience please do put your questions in the chat
Otherplease do put your questions in the chat box and we'll try our best to entertain them if uh time permits now uh given that a good number of our audience today our high school and college students we have some questions tailored in that respect right with that said where do you think investing should be on the list of priorities for a teenager all right
OtherSU then HBY and everyone it's great to be here so two score and one year ago I was a student at srcc and I had joined srcc just like many of you have joined srcc if you are confused about two score and one year ago maybe because you haven't heard the Gettysburg Address of four score and seven years ago but two score and one year ago is 41 years and uh that's 1982 when I finished high school and applied to various colleges at Delhi University and I was very excited to join shiram and that year there were
Otherjoin shiram and that year there were some very extended strikes at the University so I attended for a few weeks and then the whole place shut down for quite a few months and my brother and I basically applied to us unities and I switched from Commerce to computer engineer to computer science and then to Computer Engineering and then basically finished my my degree in in the US kind of Life trajectory changed if you will but I have very fond memories of taking the you special buses you know the few weeks at shiram at du so it was it was wonderful and in terms of I think investing and teenagers you know I think that Educational Systems around the world I think do a disservice because really kind of while we are taught compounding in a mathematical sense in math classes there's really is nothing taught in terms of investing and savings and
Questionerterms of investing and savings and runways and so on in in high schools andrunways and so on in in high schools andrunways and so on in in high schools and I think it would be very beneficialI think it would be very beneficialI think it would be very beneficial because you know there are there arebecause you know there are there arebecause you know there are there are really three things that matter in termsreally three things that matter in termsreally three things that matter in terms of ending up being extremely wealthyof ending up being extremely wealthyof ending up being extremely wealthy over time even if you have relativelyover time even if you have relativelyover time even if you have relatively modest earnings over your lifetime somodest earnings over your lifetime somodest earnings over your lifetime so the the first is you know spending lessthe the first is you know spending lessthe the first is you know spending less than you earn is really important rightthan you earn is really important rightthan you earn is really important right from the beginning and Charlie Mongerfrom the beginning and Charlie Mongerfrom the beginning and Charlie Monger says that if you consistently spend 5%says that if you consistently spend 5%says that if you consistently spend 5% more than you earn you will H have amore than you earn you will H have amore than you earn you will H have a life of extreme misery but if you spendlife of extreme misery but if you spendlife of extreme misery but if you spend 5% less than what you earn or 10% less5% less than what you earn or 10% less5% less than what you earn or 10% less than what you earn you're going to havethan what you earn you're going to havethan what you earn you're going to have a very Bountiful life so just a smalla very Bountiful life so just a smalla very Bountiful life so just a small difference there can lead to a hugedifference there can lead to a hugedifference there can lead to a huge Delta and outcome so spending less thanDelta and outcome so spending less thanDelta and outcome so spending less than you earn is very important and I wishyou earn is very important and I wishyou earn is very important and I wish that was reinforced in high schoolthat was reinforced in high schoolthat was reinforced in high school putting the Savings in a lowcost Indexputting the Savings in a lowcost Indexputting the Savings in a lowcost Index Fund is also a very good idea so you
QuestionerFund is also a very good idea so you don't need to really understand you know how to pick stocks or you know find out what are good Investments or any of that just you know buy a lowcost index fund and there plenty of them available in India and the third is the length of the runway you know so it's really important to start early and as as early as you can and start putting money away and basically what's going to end up happening is a few decades later you look to your right and you look to your left and you left all your peers way behind and life is great so yeah I wish I wish these Basics were part of core high school curriculums around the world but sadly they are not okay sir moving on to the next question what value do you ORD to uh investing in oneself when there are other options of investing as well uh for example if I'm interning and
Questionerwell uh for example if I'm interning and earning a certain stipend would you advocate for upskilling or investing in some Securities instead uh also do you think people ascribe lesser value to self-learning because returns are not exactly as evident as opposed to the many glaring examples of uh how Financial invest ments can reap healthy profits
Warrenyeah well I mean usually an investment in improving yourself is usually going to deliver the greatest returns and especially if those Investments are made very early in life but I think the most important factor is to pursue your passion so one should not do an MBA because it's going to raise your you you know compensation or open up more opportunities or any of that one should be doing that if one if one is very passionate about management and you know investing or just in general Commerce and Industry in general so it
OtherCommerce and Industry in general so it is not it is not easy as a young person is not it is not easy as a young person is not it is not easy as a young person to have Clarity on what is your calling to have Clarity on what is your calling to have Clarity on what is your calling in life and the more time you can spend in life and the more time you can spend in life and the more time you can spend early in life to try to get clarity on early in life to try to get clarity on early in life to try to get clarity on who you are and what you know excites who you are and what you know excites who you are and what you know excites you and doesn't excite you is really you and doesn't excite you is really you and doesn't excite you is really important and I think some some clues of important and I think some some clues of important and I think some some clues of that uh will come to you when you notice that uh will come to you when you notice that uh will come to you when you notice that maybe in high school you're excited that maybe in high school you're excited that maybe in high school you're excited about certain classes and certain about certain classes and certain about certain classes and certain subject and not so excited about other subject and not so excited about other subject and not so excited about other classes and other subjects so start classes and other subjects so start classes and other subjects so start spending more time on the things that spending more time on the things that spending more time on the things that you're excited about start thinking you're excited about start thinking you're excited about start thinking about careers Etc in that direction and about careers Etc in that direction and about careers Etc in that direction and and I think the and I think the and I think the self-learning I think self- learning is self-learning I think self- learning is self-learning I think self- learning is extremely important if I if I look back extremely important if I if I look back extremely important if I if I look back at my undergraduate you know Computer at my undergraduate you know Computer at my undergraduate you know Computer Engineering degree there are really just Engineering degree there are really just Engineering degree there are really just a couple of coures I can think of that a couple of coures I can think of that a couple of coures I can think of that had a huge lifelong impact on me one was
Otherhad a huge lifelong impact on me one was an elective class I took on public speaking and I really enjoyed the class and it was wonderful and I actually I just tossed a coin take whether that class or technical writing and it turned out public speaking was excellent so I think I think to the extent that you can because when we go through formal degrees and such when you look back after 5 10 15 years very little of what you learned during your school days is going to be relevant in the real world what is really going to help you a lot in the real world is if you go to sleep every day a little wiser than when you woke up and that you make reading a lifelong activity and and I think it's just like compounding what happens in 10 15 20 years is that you look to your right look to your left and your peers are so far behind and You' gone so far
Questionerare so far behind and You' gone so far ahead and you didn't go ahead becauseahead and you didn't go ahead becauseahead and you didn't go ahead because you just you know Sprint really fastyou just you know Sprint really fastyou just you know Sprint really fast it's more of a marathon than a Sprintit's more of a marathon than a Sprintit's more of a marathon than a Sprint and but that distance keeps increasingand but that distance keeps increasingand but that distance keeps increasing daily and you're enjoying the journey asdaily and you're enjoying the journey asdaily and you're enjoying the journey as well so yeah definitely I'd say investwell so yeah definitely I'd say investwell so yeah definitely I'd say invest in yourself through formal degrees andin yourself through formal degrees andin yourself through formal degrees and through self-learning I mean we have athrough self-learning I mean we have athrough self-learning I mean we have a limited time on planet Earth you knowlimited time on planet Earth you knowlimited time on planet Earth you know try to make the most of it and try totry to make the most of it and try totry to make the most of it and try to enjoy theenjoy theenjoy the journey so I think I just have followupjourney so I think I just have followupjourney so I think I just have followup question then U so you say we should wequestion then U so you say we should wequestion then U so you say we should we should become wiser every day and findshould become wiser every day and findshould become wiser every day and find what our true calling is what drives uswhat our true calling is what drives uswhat our true calling is what drives us right but U do you think one should doright but U do you think one should doright but U do you think one should do anything at all for the sake of it or doanything at all for the sake of it or doanything at all for the sake of it or do you think like like you said inherentyou think like like you said inherentyou think like like you said inherent motivation and inclination should drivemotivation and inclination should drivemotivation and inclination should drive all our endeavors and I'm asking thisall our endeavors and I'm asking thisall our endeavors and I'm asking this against the backdrop that you know whileagainst the backdrop that you know whileagainst the backdrop that you know while crafting one's career there are several
Questionercrafting one's career there are several options and opportunities that may you know Fast Track one's career right but they they at the core of it they have have a hollow impact on one's personal growth so do you think those opportunities are maybe worth pursuing or is it just the become wiser everyday approach you would uh maybe suggest
Charliewell you know there are practicalities in the sense that basically when we pursue degrees we don't have a lot of choice about you know what what courses we take and what professors we get and which classes are interesting which classes are not so so a lot of that is going to be hit or miss we don't have a whole lot of choice in there because you know the only choice we have is whether we do the degree or not so try to make make sure that the degree is as closely aligned to what you're interested in and I think I
Otherwhat you're interested in and I think Iwhat you're interested in and I think I think beyond that I think if you followthink beyond that I think if you follow your nose it will lead it will lead toyour nose it will lead it will lead to great things I think that what I'vegreat things I think that what I've always found is that when I'm reallyalways found is that when I'm really curious about something and I'll go downcurious about something and I'll go down a r Abit hole of trying to figure it outa r Abit hole of trying to figure it out many times it's extremely rewarding inmany times it's extremely rewarding in fact I I ended up in the investmentfact I I ended up in the investment business just because I accidentallybusiness just because I accidentally picked up a book on investing to read onpicked up a book on investing to read on a flight from E to Chicago and I reallya flight from E to Chicago and I really picked it up at at random you know Ipicked it up at at random you know I never worked in the industry I didn'tnever worked in the industry I didn't have degrees in in finance and so on andhave degrees in in finance and so on and it was really that that book led me downit was really that that book led me down a rabbit hole of other readings anda rabbit hole of other readings and other books and other writings and hereother books and other writings and here we are you know so so I think I thinkwe are you know so so I think I think it's really important to to pursue whatit's really important to to pursue what you are really interested in and pursueyou are really interested in and pursue it to the fullest extent that you
Questionerit to the fullest extent that you can right thank you so much for that answer sir U so you're evidently an advocate of D and right you say uh it's the approach doing businesses that a business that guarantees an upside without the possibility of a downside now another word that really fascinates me is jugar right and I just want to understand from you what do you think Jar's relevance is for an entrepreneur and an entrepreneur's Journey really
Otherwell I think the Indian word jugar is kind of difficult to directly translate uh but I think most of you know what what it means and and yes absolutely I mean hacks in life are really important and and and when we you know when I'm looking at a particular business or a particular industry what what I'm you know the the data set is very large so when you when you're looking at a you know some
Questioneryou're looking at a you know someyou're looking at a you know some industry I think just the amount ofindustry I think just the amount ofindustry I think just the amount of information and what what is going on isinformation and what what is going on isinformation and what what is going on is can be daunting but the important thingcan be daunting but the important thingcan be daunting but the important thing is that you have to get to the three oris that you have to get to the three oris that you have to get to the three or four important factors that will drivefour important factors that will drivefour important factors that will drive most of the outcome and the result ofmost of the outcome and the result ofmost of the outcome and the result of that investment of or of that businessthat investment of or of that businessthat investment of or of that business and that's where a lot of the jagar andand that's where a lot of the jagar andand that's where a lot of the jagar and hacks come in so you have to behacks come in so you have to behacks come in so you have to be sensitive to how can you accelerate thesensitive to how can you accelerate thesensitive to how can you accelerate the process if you can there's there'sprocess if you can there's there'sprocess if you can there's there's obviously the base path that you canobviously the base path that you canobviously the base path that you can take which is you can read a lot oftake which is you can read a lot oftake which is you can read a lot of historic annual reports and you can youhistoric annual reports and you can youhistoric annual reports and you can you can read a lot of historic transcriptscan read a lot of historic transcriptscan read a lot of historic transcripts and you look at a lot of things theand you look at a lot of things theand you look at a lot of things the company said in the past Etc you cancompany said in the past Etc you cancompany said in the past Etc you can read industry reports and you can readread industry reports and you can readread industry reports and you can read competitors annual reports and and allcompetitors annual reports and and allcompetitors annual reports and and all of those things over time will will giveof those things over time will will giveof those things over time will will give you a picture in your head of what'syou a picture in your head of what'syou a picture in your head of what's going on and what's important and so on
Othergoing on and what's important and so ongoing on and what's important and so on it can be accelerated sometimes when ifit can be accelerated sometimes when ifit can be accelerated sometimes when if youyouyou can read something that someone else hascan read something that someone else hascan read something that someone else has written about the business or thewritten about the business or thewritten about the business or the industry where they've digested a lot ofindustry where they've digested a lot ofindustry where they've digested a lot of facts already and so it can acceleratefacts already and so it can acceleratefacts already and so it can accelerate the learning but you have to be carefulthe learning but you have to be carefulthe learning but you have to be careful that you're kind of reading the rightthat you're kind of reading the rightthat you're kind of reading the right stuff or waiting the right stuff in thestuff or waiting the right stuff in thestuff or waiting the right stuff in the right amount of weightage that should beright amount of weightage that should beright amount of weightage that should be given so basically I would say that ingiven so basically I would say that ingiven so basically I would say that in ininin investing what is really important isinvesting what is really important isinvesting what is really important is that we start with a very large data setthat we start with a very large data setthat we start with a very large data set and what you need to end up with is twoand what you need to end up with is twoand what you need to end up with is two three four factors that are etched inthree four factors that are etched inthree four factors that are etched in your brain that are going to driveyour brain that are going to driveyour brain that are going to drive outcome and why those factors are goingoutcome and why those factors are goingoutcome and why those factors are going to are likely to work out in a certainto are likely to work out in a certainto are likely to work out in a certain way now the reality with investing isway now the reality with investing isway now the reality with investing is that it's a high error rate so even whenthat it's a high error rate so even whenthat it's a high error rate so even when we do all of that because businesses arewe do all of that because businesses arewe do all of that because businesses are uncertain we may have 30 40
Questioneruncertain we may have 30 40 50% of the time that we're just wrong and that's okay you know we learn and keep moving on but if you're right half the time and hang on and so on life will end up I mean the end result will be just fine no issues thank you sir
Questioneruh being a global investor what's the India story that you see uh what is the future that you Invision for the people of India and what would you probably say to somebody uh who wishes to settle abroad because of maybe like better prospects so yeah so just an addon uh what do you think or how do you envision your your life or your career would be had you probably stayed in Shri RAM and not gone to us
Otheryeah you know let me take the second question first and then I'll I'll get to pu's question so when when I was in India in high school Etc I I I changed a lot of different schools moved
Otherchanged a lot of different schools moved a lot of different places but I woulda lot of different places but I woulda lot of different places but I would say none of my classmates or I when wesay none of my classmates or I when wesay none of my classmates or I when we were growing up had ever expected thatwere growing up had ever expected thatwere growing up had ever expected that we would live any part of our lifewe would live any part of our lifewe would live any part of our life outside India that pretty much justoutside India that pretty much justoutside India that pretty much just wasn't was n part of the equation youwasn't was n part of the equation youwasn't was n part of the equation you know idea was that you would finishknow idea was that you would finishknow idea was that you would finish college and so on and I lost touch withcollege and so on and I lost touch withcollege and so on and I lost touch with a lot ofa lot ofa lot of my high school friends and so on andmy high school friends and so on andmy high school friends and so on and then Facebook came around and after manythen Facebook came around and after manythen Facebook came around and after many decades I was reunited with many greatdecades I was reunited with many greatdecades I was reunited with many great and what I what I noticed is that moreand what I what I noticed is that moreand what I what I noticed is that more than half of my classmates in thethan half of my classmates in thethan half of my classmates in the different schools I went to ended updifferent schools I went to ended updifferent schools I went to ended up outside India it was a very large numberoutside India it was a very large numberoutside India it was a very large number I I had not expected that but it was aI I had not expected that but it was aI I had not expected that but it was a large number and I think part of thelarge number and I think part of thelarge number and I think part of the reason that happened was that uh if Ireason that happened was that uh if Ireason that happened was that uh if I had gone to Shri Ram probably what wouldhad gone to Shri Ram probably what wouldhad gone to Shri Ram probably what would have happened is one way or another Ihave happened is one way or another Ihave happened is one way or another I would have probably ended up in the itwould have probably ended up in the itwould have probably ended up in the it field because it was growing so fast and
Otherfield because it was growing so fast and you know a lot of people were doing like these diploma courses at niit and so on so forth and there was a huge boom of of people coming to the US because there was a large amount of IT jobs that had opened up outside India and so probably the likely trajectory may have been that I may have ended up in the US many years later with a somewhat different trajectory than where I ended up so but I think I think that uh when when we look at the situation today I think the situation today is a little bit different in the sense that you know the iits when they were graduating a lot of students in the '70s and 80s and maybe even in the early 90s they just weren't a lot of opportunities in India so a large portion of those folks ended up going for master's degrees in the US and they ended up staying and so
Otherthe US and they ended up staying and so on I think today the opportunity set in India is very different it's very significant a lot of multinationals have come into India a lot of Indian companies have grown a lot and they're pretty world class in terms of how they operate and the opportunities they offer and at the same time if I look at a place like the US the immigration situation is such a mess over here that you know for people coming on a work visa sometimes at least on paper it looks like it would take 70 or 80 years to get a green card you know follow there the the backlogs and waiting lists and all that which is ridiculous actually I think the the big strength of the US has been that it's attracted Talent from all over the world and it's built the country and I wish the US would fix its immigration system Canada has a good system Australia has a good
Otherhas a good system Australia has a goodhas a good system Australia has a good system Singapore has a good system sosystem Singapore has a good system sosystem Singapore has a good system so many other countries are in fact gainingmany other countries are in fact gainingmany other countries are in fact gaining what the US is losing at which iswhat the US is losing at which iswhat the US is losing at which is unfortunate for my vantage point but I Iunfortunate for my vantage point but I Iunfortunate for my vantage point but I I think I think looking at it from thethink I think looking at it from thethink I think looking at it from the point of view of being in India I thinkpoint of view of being in India I thinkpoint of view of being in India I think probably the best way to make theprobably the best way to make theprobably the best way to make the decision is in terms of lifestyle and indecision is in terms of lifestyle and indecision is in terms of lifestyle and in terms of family and you know what yourterms of family and you know what yourterms of family and you know what your personal preferences are and personalpersonal preferences are and personalpersonal preferences are and personal aspirations are but I think there's aaspirations are but I think there's aaspirations are but I think there's a lot of opportunities in India andlot of opportunities in India andlot of opportunities in India and there's also a lot of opportunitiesthere's also a lot of opportunitiesthere's also a lot of opportunities outside India so I think at this pointoutside India so I think at this pointoutside India so I think at this point it's up to the individual what theyit's up to the individual what theyit's up to the individual what they
Questionerright so I just want to go back to theright so I just want to go back to theright so I just want to go back to the youth investing perspective right youyouth investing perspective right youyouth investing perspective right you think behavioral Finance is maybe morethink behavioral Finance is maybe morethink behavioral Finance is maybe more important for teenagers when they startimportant for teenagers when they startimportant for teenagers when they start their investing Journey because as I seetheir investing Journey because as I seetheir investing Journey because as I see the technical aspects of investing youthe technical aspects of investing you
Questionerthe technical aspects of investing you know ratios analyzing financialknow ratios analyzing financialknow ratios analyzing financial statements valuation Etc can be pickedstatements valuation Etc can be pickedstatements valuation Etc can be picked up eventually too but is ingraining andup eventually too but is ingraining andup eventually too but is ingraining and investing temperament more important ininvesting temperament more important ininvesting temperament more important in the youth years and if so how do youthe youth years and if so how do youthe youth years and if so how do you think the youth can learn about thethink the youth can learn about thethink the youth can learn about the psychology of investing
Questioneryeah so I thinkpsychology of investing yeah so I thinkpsychology of investing yeah so I think there's a there's a pretty bigthere's a there's a pretty bigthere's a there's a pretty big demarcation that happens between so onedemarcation that happens between so onedemarcation that happens between so one can do extremely well by just being acan do extremely well by just being acan do extremely well by just being a passive investor you know just investingpassive investor you know just investingpassive investor you know just investing in index funds and so on and one neverin index funds and so on and one neverin index funds and so on and one never needs to study a business or any of thatneeds to study a business or any of thatneeds to study a business or any of that and you'll end up with a great resultand you'll end up with a great resultand you'll end up with a great result now if you decide to cross over to thenow if you decide to cross over to thenow if you decide to cross over to the other side where you actually want toother side where you actually want toother side where you actually want to analyze businesses and figure outanalyze businesses and figure outanalyze businesses and figure out investing and buy stocks and all of thatinvesting and buy stocks and all of thatinvesting and buy stocks and all of that I think that is a very different gameI think that is a very different gameI think that is a very different game game and I think that game would takegame and I think that game would takegame and I think that game would take some time tosome time tosome time to master and probably there's no bettermaster and probably there's no bettermaster and probably there's no better way to master it than to take arrows in
Otherway to master it than to take arrows in your back so as you invest as you make your back so as you invest as you make your back so as you invest as you make mistakes you should Endeavor to learn mistakes you should Endeavor to learn mistakes you should Endeavor to learn from those mistakes and you should from those mistakes and you should from those mistakes and you should Endeavor to learn a lot from other Endeavor to learn a lot from other Endeavor to learn a lot from other people's mistakes so I think when you people's mistakes so I think when you people's mistakes so I think when you when you move from passive investing or when you move from passive investing or when you move from passive investing or you know index investing to you know you know index investing to you know you know index investing to you know active management and such you have to active management and such you have to active management and such you have to have a framework so you start with a have a framework so you start with a have a framework so you start with a framework so some first few pieces of framework so some first few pieces of framework so some first few pieces of the framework is how many stocks does the framework is how many stocks does the framework is how many stocks does your temperament say that you should your temperament say that you should your temperament say that you should hold you are you comfortable with five hold you are you comfortable with five hold you are you comfortable with five or 10 or 20 or 30 so that needs to fit or 10 or 20 or 30 so that needs to fit or 10 or 20 or 30 so that needs to fit you know what your temperaments Etc are you know what your temperaments Etc are you know what your temperaments Etc are the second is that many aspects of the second is that many aspects of the second is that many aspects of investing cannot be taught uh they are investing cannot be taught uh they are investing cannot be taught uh they are inborn trades that either exist or don't inborn trades that either exist or don't inborn trades that either exist or don't so if one has the natural tendency of a so if one has the natural tendency of a so if one has the natural tendency of a hyperactive Trader who's going in and hyperactive Trader who's going in and hyperactive Trader who's going in and out of positions several times a day it out of positions several times a day it
Questionerout of positions several times a day it may be difficult to transform that person into someone who buys you know one stock a year for example and holds them for 10 20 30 years I think that's so I think no knowing your temperament and knowing your aptitude and comfort level and style is really important so you start with some baseline of some things you read and figure out what kind of seems to be the and I think reading everything you can that's been put out by Warren Buffett and Charlie Bunger and all the busha haway meetings which are online at now at buffett. cnbc.com which is a tremendous resource hundreds of ours a video to greatest greatest investors ever is a is a great place to try to understand what your framework should be and and yeah then the you know the notion of Behavioral Finance versus you know the quantitative stuff all that
Otherknow the quantitative stuff all that kind of naturally falls into place once you have framework that you can work with and you need to come up with something that fits for you and can work for you take it from there uh just to follow up to that sir uh if you were to give uh percentages as to why investors make mistakes because of their temperament or emotions uh versus actual stock picking what do you think that percentage would look like uh and also do investors lose less uh I'm not saying make more uh but do they lose less when they don't care in investing I'm sorry can you repeat that last sentence right so so I basically said uh do investors lose less when they don't care when they don't care
OtherYeah well yeah I mean I I think that I think with investing the reason the error rate is high is because of I would say primarily two reasons one is that humans have a
Questionertwo reasons one is that humans have a tendency to Fork to basically project present circumstances to Infinity so for for example you know we have a company in the US called Nvidia and Nvidia just hit a trillion dollar market cap and it's up almost like 200% this year in the was five six months and Nvidia is a great business it's a great business it's at the epicenter of the AI boom and a lot of people think that Nvidia will do really well I don't have any position in Nvidia and I'm not suggesting you should go buy the stock but I'm just using it as an example so I would say that there's a lot of euphoria around Nvidia and if one were were to do some type of analysis of a discounted cash flow model where you look at the earnings of Nvidia today and you do some projections of what you think they earnings are in three years or five
Questionerearnings are in three years or five years or 10 years and then you discount it back I I think it'd be difficult to justify the billion doll a trillion dollar market cap be difficult to come up with a future cash flow stream in the next 10 years or so that would exceed that I have no idea what would happen to Nvidia but I would just say that what I have noticed in in in equity markets is that they vacillate a lot between fear and greed uh they they tend to at times get very overheated and overvalued and they tend to get very depressed at other times and because it's auction driven markets where prices are set by the sentiments of investors there's a lot of positive sentiment about n it's a great business but similar sentiment existed in early 2000 with Microsoft and so I I remember that when I when I started my Fund in 99 one of the first individuals probably the first
Questionerthe first individuals probably the first 2030 investors I had was a guy who Indian guy who had risen quite high in Microsoft and had retired ired early and he was one of the very early employees of Microsoft he knew Bill Gates well closely with him and so on and he he had he had made an investment P Bri fund and he told me Hey listen if you're ever in Seattle I can introduce you to a bunch of current and formal Microsoft people and these guys are quite wealthy they've got a lot of stock options from a long time ago and some of them may be interested in investing in your fund and P funds was very knew just like you know a couple of million dollars2 $3 million in assets and I said oh I'm going to be in Seattle day after tomorrow so he said oh that's great so he walked me around Microsoft introduced me to different people a bunch of them later invested
Questionerpeople a bunch of them later invested with me but I told many of those individuals I met that their livelihood was coming from Microsoft most of their net worth was in Microsoft stock or in Microsoft options that had been granted and when I looked at the Microsoft market cap at that time in early 2000 it was over 600 billion it was in the top three most valuable companies in the world at that time the top three most valuable companies were Cisco Microsoft and General Electric none of those would have been a great investment if you put you know a portfolio oneir each in these three Investments GE is basically for practical purposes disappeared Microsoft never saw that 600 billion market cap for the next 13 years and in fact it took a huge draw down I mean the 600 billion went down to I think less than 100 100 billion or so thereabouts
Questionerthan 100 100 billion or so thereabouts so it was a huge draw down it's now at aso it was a huge draw down it's now at aso it was a huge draw down it's now at a much higher valuation so it's donemuch higher valuation so it's donemuch higher valuation so it's done really well but I think from 2000 toreally well but I think from 2000 toreally well but I think from 2000 to 2012 or 2013 it would have been a very2012 or 2013 it would have been a very2012 or 2013 it would have been a very very rough and bumpy ride and I don'tvery rough and bumpy ride and I don'tvery rough and bumpy ride and I don't know anyone who would have held on toknow anyone who would have held on toknow anyone who would have held on to their stock through that ride and thetheir stock through that ride and thetheir stock through that ride and the Nvidia situation today so the historyNvidia situation today so the historyNvidia situation today so the history doesn't repeat itself but it does rhymedoesn't repeat itself but it does rhymedoesn't repeat itself but it does rhyme and when I look at the Nvidia situationand when I look at the Nvidia situationand when I look at the Nvidia situation today to me it Rhymes a lot with the waytoday to me it Rhymes a lot with the waytoday to me it Rhymes a lot with the way Microsoft was at that time it was justMicrosoft was at that time it was justMicrosoft was at that time it was just you know Blu of the Blue Chips greatyou know Blu of the Blue Chips greatyou know Blu of the Blue Chips great business recovering revenues how can youbusiness recovering revenues how can youbusiness recovering revenues how can you do without word and windows and Exceldo without word and windows and Exceldo without word and windows and Excel and all of that and so it's an importantand all of that and so it's an importantand all of that and so it's an important I I mean now the other thing aboutI I mean now the other thing aboutI I mean now the other thing about investing is that there are no calledinvesting is that there are no calledinvesting is that there are no called strikes it's a baseball term you can letstrikes it's a baseball term you can letstrikes it's a baseball term you can let a lot of balls go by and there's noa lot of balls go by and there's noa lot of balls go by and there's no penalty youpenalty youpenalty you only could possibly get a penalty if youonly could possibly get a penalty if you
Questioneronly could possibly get a penalty if you try to hit something so if I don't maketry to hit something so if I don't maketry to hit something so if I don't make an investment inan investment inan investment in Nvidia and Nvidia ends up being a$1Nvidia and Nvidia ends up being a$1Nvidia and Nvidia ends up being a$1 trillion company 10 years from now Itrillion company 10 years from now Itrillion company 10 years from now I don't really lose anything yes I didn'tdon't really lose anything yes I didn'tdon't really lose anything yes I didn't make that 10x but what matters is what Imake that 10x but what matters is what Imake that 10x but what matters is what I actually invested in what happened withactually invested in what happened withactually invested in what happened with those things so n India could be 10those things so n India could be 10those things so n India could be 10 trillion you know few years from now ittrillion you know few years from now ittrillion you know few years from now it could be a few hundred billion a fewcould be a few hundred billion a fewcould be a few hundred billion a few years from now or even less we don'tyears from now or even less we don'tyears from now or even less we don't know and and so one of the reasons forknow and and so one of the reasons forknow and and so one of the reasons for the error rate is like Ithe error rate is like Ithe error rate is like I said people get caught up in thesaid people get caught up in thesaid people get caught up in the Euphoria flavor of the day fear ofEuphoria flavor of the day fear ofEuphoria flavor of the day fear of missing out and all of these thingsmissing out and all of these thingsmissing out and all of these things another reason why there's a high erroranother reason why there's a high erroranother reason why there's a high error rate inrate inrate in investinginvestinginvesting is we are trying to predict the futureis we are trying to predict the futureis we are trying to predict the future trajectory of a business the futuretrajectory of a business the futuretrajectory of a business the future trajectory of atrajectory of atrajectory of a business has so many different unknownsbusiness has so many different unknownsbusiness has so many different unknowns and variables a great manager leaves orand variables a great manager leaves orand variables a great manager leaves or a great manager comes in or government
Questionera great manager comes in or government regulations change or there were duties which prevented competitors from abroad coming in and those duties go away so there are myate of factors internal to the company external to the company that or with competitors that could affect the future outcomes and so when we are trying to you know look at a business and say oh I think five or 10 years from now this will be worth you know three times what it's worth today that's an exercise that's prone to to by definition a high error rate and so we we need to be aware of that and I think that in general having a a strong dose of P pessimism investing in the interesting art you need to be a pessimist and an optimist at the same time can of keep two thoughts in your head at the same time and if you can do that then that can work out quite well all right sir do
Questionercan work out quite well all right sir do you think investing is a privileged concept and also do you think there's any further scope for democratizing investing and if that is possible then how do you think that we should go about it
Warrenwell the the advances that have taken place in investing for example we now have you know we can we can trade from our phones and you know the apps are pretty good the frictional costs are very low in the US we can trade with zero friction call you don't pay any commissions if you don't want to so on the surface these look like great things in in reality what would help investors a lot would be Buffet's rule of the 20 punch card so Buffett says that if you were allowed to only buy 20 stocks in your entire lifetime you would be really careful about each stock that you brought because now you only have 19 left and then you would have 18 LS so so
Questionerleft and then you would have 18 LS so soleft and then you would have 18 LS so so basically I think that the ease ofbasically I think that the ease ofbasically I think that the ease of trading and the reduction of frictionaltrading and the reduction of frictionaltrading and the reduction of frictional costs have actually had probably acosts have actually had probably acosts have actually had probably a negative impact on investors becausenegative impact on investors becausenegative impact on investors because they've increased if they've increasedthey've increased if they've increasedthey've increased if they've increased the propensity to go in and out ofthe propensity to go in and out ofthe propensity to go in and out of positions so if there was a 20 punchpositions so if there was a 20 punchpositions so if there was a 20 punch card rule investors would be helped ifcard rule investors would be helped ifcard rule investors would be helped if there was a rule which said that if youthere was a rule which said that if youthere was a rule which said that if you invest in a company you cannot sell itinvest in a company you cannot sell itinvest in a company you cannot sell it for at least five years that would helpfor at least five years that would helpfor at least five years that would help investorsinvestorsinvestors so it's kind of counterintuitive but ifso it's kind of counterintuitive but ifso it's kind of counterintuitive but if you slowed down the activity and slowedyou slowed down the activity and slowedyou slowed down the activity and slowed down and reduce the number of decisionsdown and reduce the number of decisionsdown and reduce the number of decisions investors would get help so I to go toinvestors would get help so I to go toinvestors would get help so I to go to China for a bit right um so ralo hasChina for a bit right um so ralo hasChina for a bit right um so ralo has fleshed out in his book The Changingfleshed out in his book The Changingfleshed out in his book The Changing world order that he sees China being theworld order that he sees China being theworld order that he sees China being the next Global superow displacing the USnext Global superow displacing the USnext Global superow displacing the US now I've listened to a couple of yournow I've listened to a couple of yournow I've listened to a couple of your interviews where you've reasoned out why
Questionerinterviews where you've reasoned out why you exited baba but uh I want to know how you look at this thesis from a geopolitical point of view right that is the investing investing aside do you think this will play out even a bit well
QuestionerI think when you're investing you're far better off focusing on the business and not spending a lot of time trying to figure out geopolitics and so on and I think I think that there was a time in the early 80s where the expectation was that Japan's GDP would exceed the US in some finite period of time because it had been growing so fast and the Japanese economy basically stalled so what was a juggernaut and lcal economy uh in the 50s 60s 7s and 80s did not do as most people had forecasted China has had a spectacular run I think it is an unprecedented run in human history in terms of the number of people lifted from poverty since the
Otherof people lifted from poverty since the 1970s this a truly spectacular outcome I mean India would be a very small shadow of that in terms of what what China was able to achieve if India can achieve anything resembling that in the next few decades we would not be able to recognize it it would just be a different ball game the place would look like Dubai everywhere you know and so so yeah I mean I think that some of these trajectories become not so easy to figure out one of the I would say one of the negatives that China is now dealing with is negative population growth and negative population growth has been really really difficult problem for governments to solve so average couple needs to have 2.1 kids for population to neither grow nor nor drop and Japan has been below that 2.1 for a long time in fact for the last few year last couple of years about 1.6 million
Questionerlast couple of years about 1.6 million people for example died last year in Japan and 800,000 were born so you're losing close to a million people a year which is a very significant rate of decline taking place in the case of Korea it is far more extreme so the the Japanese couple average children is like 1.4 or so in of 2.1 which is quite low Korea is less than 0.8 that is an shockingly low rate I mean in the case of Japan you're seeing a less than 1% annual rate of population decline in the case of Korea you would see a lot more than population Decline and both these countries have historically and in including China all three of these countries have historically but especially Japan Japan and Korea have been very reluctant to bring in immigrants and and I think the Japanese now are beginning to shift on that and my guess is the Koreans their concern is
Questionermy guess is the Koreans their concern is that the homogeneous culture would get destroyed and it's a legitimate concern and so citizens of the country have a right to make a decision how they want the future to unfold but and and I think with China I don't know whether the Govern government policies of basically trying to get more couples to have more kids more couples to even just get married that's a big challenge even in Korea now is just getting couples to marry is very uphill and then the cost to raise a kid keeps going up so much and and so on so one of the amazing things about the United States is that there are it is an anomaly actually for a Advanced economy to have a growing population generally speaking when GDP per capita incomes rise significantly and you get to being an advanced civilization and women are in the workforce and so on and with a lot of
Charlieworkforce and so on and with a lot of Independence and equal rights and so on the natural outcome is a drop in the birth rate and the United States actually amazingly has been able to keep keep up a birth rate over 2.1 it's now I think uh right on the edge or actually below that now but with the inclusion with the inclusion of immigration so if we didn't have immigration in the United States we would have a declining population The Birth has been below 2.1 for a while but when you add immigration to the US when I came to the country you know two score years ago when I came two score years ago there were about 250 million people so in the country we are now approaching about 335 million in the country so it's gone up it's it's a good 30 plus percent increase over 40 years which is great and so I I think I think my my general take is that one will face some
Todd Combstake is that one will face some headwinds in most businesses uh when one is investing in economies with declining populations you would need to either have a mouse strap that most of the population doesn't have and therefore there will be a large Market that'll be going after those products like nvds products for example or you would need to be an export Juggernaut or something where you're leveraging country resources but your real Market is the is is the world and and so on but if you're a you know standard consumer Products Company Dom domestically focused in a competitive market you are facing a lot of headwinds because your your Market is shrinking so I think that having said all of that I think one is better off focusing on the micro versus the macro I think when you look at an investment I made in Alibaba for example which is a mistake that
Questionerfor example which is a mistake that investment kind of went sideways because there were things the state did which came from left field and yeah probably should have paid more attention but like I said it's it's hard to predict these types of things when the past environment has been so benign for such a long time so we'll always run into that we'll always run into things that don't work out for a number of reasons like I said the 40 50% error rate is just far for the course Warren Buffett would have a 50% error rate in businesses that he's buying so and he's best of the best so so we we are probably like I said even though we had the mistake in Alibaba and so on I would still be a proponent of being very focused on the core business rather than trying to figure out a lot of macro things uh right sir uh so in one of your interviews you said uh if there are no
Questionerinterviews you said uh if there are no humans there are no problems now although this was said in a different context do you think it extends to the business of investing and more specifically the money management industry well you
Warrenknow Pascal you know the famous mathematician said that all's all man's miseries stem from his inability to sit quietly in a room and do nothing and I would kind of paraphrase Pascal and say all investment manager decisions all investment manager misery stem from their inability to sit quietly in a room and do nothing and and you know my dad used to say that to have a really great life all one needs is one good wife and one good friend so less is more and definitely quality is more important than quantity uh so I I would say that it is very much worthwhile for most of us if we had a few great relationships with people who are vastly
Otherrelationships with people who are vastly better than us than a lot of mediocre relationships that we spend a lot of time with and which don't end up really may even end up having negative impacts on our life so there's a there's a gravitational pull that happens we hang out with people better than us we get better we hang out with people worse than us we get worse so there should be a very deliberate strong effort made to to try to hang out and be friends with people who are vastly better than us and I think that would lead to just great outcomes long term and the good news is we don't need them in large numbers fact it's better if they are in very small numbers so that's that's I think the way to go and so yeah the the less human contact I have in general I think the happier I am so but with some humans I enjoy the contact a lot and so I'm happy to spend
Questionercontact a lot and so I'm happy to spend the time with that right sir um so I was reading an article that M TW M twed today actually which showed that S&P Global gave Tesla a lower ESG score than Philip Morris International the Malo company so I I want to know what do you think is the inherent relevance of ES both in terms of returns as well as the societal impact when certain Boke and secondary aspects of ESG sort of wail the very business impact a company may have
Charlieyeah I think the tree huggers have kind of gone nuts and I actually don't think that they have a balanced view on life so you know for example whole is treated as a four-lettered word you know anyone using coal is a bad person anyone mining coal is a bad person the reality is that we would not have a civilization if we don't have steel and you really cannot practically
Warrensteel and you really cannot practically produce steel at reasonable prices at reasonable costs without metallurgical coal it's it's just so you know if the tree hugger would simply shut down all metallurgical coal mining civilization as we know it would come to so so I I have I I I don't spend a lot of time thinking about ESG I think yes yes we have one planet and yes we should take care of it but like Charlie says the the answer is not necessarily always prevention the answer can also come from Advanced engineering and different things so for example there are technology being worked on right now to pull carbon from the air and you know put it deep into the Earth and those are functioning Technologies today they are very expensive but it is worth investing in those Technologies and bringing down the cost curves on those and so we may we may have difficulty as a civilization
Questionermay have difficulty as a civilization taking emissions to zero I mean I think airplanes will use fossil fuels for decades could be a century or more because there is no real practical alternative you know so electric airplane the pipe dream you know so I think that in many cases we will be a species that does impact the environment and there could be answers that come out of advanced engineering which negate those negative impacts so yeah I take I take the ESG stuff with a pinch of salt because I just see so much bizarreness in how things are being done and it's become very political and there's all these kind of weird outcomes you get where Tesla is a bad company and you know some some oil refiner or oil producer is a good company this kind of strange so I just want to ask you a question related to venture capital for a second right do you think uh private
Questionera second right do you think uh private Equity or Venture Capital firms uh do their do their success lie in others loss and I'm saying this uh being the being that more often than not this happens and these are for most of the firms not all and what I mean is that private Capital cares about one thing and one thing only right which is valuation valuations at least in the recent past have been as froy as they can pre IPO so private Equity players have essentially made their money but when these IPOs have hit the market there the strong narrative that the VCs have put out has actually flowed along to the public markets uh and I want to say the retail investors have maybe been brainwashed by it and they end up investing only to realize that value was inflated and maybe absent even so what do you think about that that take well
Charliewell I would say an investor who ends up with a poor outcome has only himself or herself to blame no one put a gun to the head and ask them to buy X or buy y or buy Z it is in the nature of investing that we have a lot of snake oil snake oil salesmen investment bankers and and Underwriters and so on who will bring things to public markets and package them in manners that look really exciting and we've seen this story for a 100 years and our job as investors is to sift through all that so one of the simple rules an investor can use is not to invest in IPOs and not to invest in any businesses that have less than five or 10 years of history as a public company so if you just put that filter in you wiped out the salesman and the salesman's pictures don't mean much so I do not believe venture capital is evil and I do not believe that it's a zero sum game or
Questionerbelieve that it's a zero sum game or that they are taking money from somebody that they are taking money from somebody else I think the Venture capitalists provide a real service to society I also think that venture capital is a really really difficult business to do well in if you look at the historic returns in Silicon Valley or Venture firms there is a massive Delta between the top quartile firms and bottom quartile firms basically if you are not in the top quartile firms in Silicon Valley you will have terrible results because in Venture Capital deal flow matters and the deal flow is going to end up with the people who have the brands so I have I have a number of venture capitalists who are investors in my fund and for example one of them was telling me that if they had access to the trash can of seoa farm their results would be spectacular so they said if we could just take a look at everything seoa
Questionerjust take a look at everything seoa turns down we would do so well right so not the deals that seya invests in the ones that seoa rejects because his firm doesn't have the brand name so those deals never show up on his doorstep the deals that show up on his doorstep are so useless compared to the deals that show up at seoa so if you are seoa or andreon horovitz or you know why combinator and so on you get the pick of the letter and you have a very good chance of doing really well because you know you're going to say no to a lot of great things but you're probably going to say yes to some truly exceptional things that most other people never get to look at so I actually think Venture venture capitalist as a group do a huge service to society they are providing high-risk Capital to entrepreneurs who would not have a way to really scale and
Otherwould not have a way to really scale and of course it is the job of venture capitalists and bankers and private Equity players to dress up the pig as best as they can and bring it to the public markets at some point so they can get an exit we know that and it's our job to be very UNS skeptical so to the extent that we can do our job we'll be fine and they should be allowed to do their job that'll be fine too right so thank you so much for that we can maybe entertain one or two audience questions if that's okay with you sure right so uh we have a question from AR manetti he asks do you believe Tech giants like Microsoft and Google will dominate the AI race or is it startups who will lead that yeah I mean I think that's a really good question I accidentally this year I have to pinch myself sometimes but accidentally this year in Omaha I got seated next to Bill Gates at
QuestionerOmaha I got seated next to Bill Gates at a dinner small dinner for 2 and a half hours and I spoke to him about everything under the sun you know we had a very long one-on-one engaging conversation which I never thought would ever happen in my life you know he probably still doesn't know who I am and he probably forgotten the conversation already that's okay I would just say this I mean I I I had a perspective on Bill and I've looked at his history and all of that truly one of the great brains and Business Leaders of our time i' played a game with Bill I said Bill I'm going to name a tech company you tell me whether you would go long or you would go short or you'd be neutral and I won't go through the results of that over here but I went through you know Nvidia AMD and and and Google Salesforce and a whole bunch of names with him and he was just rapid
Questionernames with him and he was just rapid fire giving me answers and you know drill downs and why and so on so forth and the breadth and depth of his knowledge on a wide variety of subjects even Beyond technology you know we spent time talking about nuclear reactors and we talked about you know toilets in India and just I me his his he's just a guy who's you know picked up a lot of data and he's got a brain that can synthesize a lot so I would just say that he's not running Microsoft he does interact a fair bit with SAA but I would say this these types of questions about you know who wins the AI race to me fall in the too hard part it's it's if I were to make an investment I have an idea where I would invest I won't share that here I would say that if you were an investor in Microsoft I would just keep that investment you know I don't know if you
Questionerinvestment you know I don't know if you were looking to invest in Microsoft today that would do it on again paying a rich price for a company that's a tremendous company and I'm a cheap skate at heart so it's hard for me to pay up for things but yeah I think those types of questions about you know who's going to win the air r i I like to have more simpler questions in investing where the answer has a higher probability of success then Blue Sky thinking like that right so I think the last question and maybe a simpler question is uh which stock should we buy no I'm joking um so I guess we would love to entertain more questions but we're short on time so uh I guess we'll close it at that over to
Otherp uh sir uh we would like to express our H heartfelt gratitude uh thank you for making this session such a great success with your valuable insights and
Otherwith your valuable insights and expertise your presence today has truly left us enriched and we are grateful for your participation thank you so much for taking out the time for being here with us and enriching us with the knowledge that has evidently been built over many years of experience uh I also extend our gratitude to our teacher in charge for always giving us opportunity to learn better lastly thank you everyone uh for joining us today and being such a wonderful audience uh we are sure it was an amazing session for uh everybody oh thank you so much everyone have a good night thank you so thank you it was it
Otherwas a true pleasure to uh hang out with you guys I really enjoyed the kind of Direction you guys took and the kinds of questions you asked it was different than many of the other interviews I had done and I was especially excited when
Otherdone and I was especially excited when you guys at srcc asked me to do a session with you and now you can understand why because you know two score and one years ago I was on that campus which was a lot of fun and so thank you very much and it was great to hang out with all of you we'll see you around thank you thank you so much sir thank you sir thank you so much
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