Quote · My First Million
Mohnish Pabrai: This will save you 10 years of bad investments
Where this was said
Wait for fat pitches
At 39:29 · chapter starts 35:03
The 'wait for fat pitches' chapter opens with Pabrai's image of a whale: investors swim constantly beneath the surface, but the world only sees the whale when it surfaces [1] — Mohnish Pabrai "Buffett sifted through garbage bins for thrown-away winning racetrack tickets as a child, then spent years reading Moody's manuals page by …" 34:00 . Buffett's childhood habit of sifting through racetrack garbage cans for thrown-away winning tickets is the earliest expression of this pattern — he was 12, couldn't cash them himself, gave them to Aunt Alice, and made notes. In his early 20s he read through Moody's manuals — thousands of pages of thin paper, tiny text — page by page, looking for anomalies. The standard was the one set by Western Insurance: stock at $15, earnings of $25 last year, $40 in cash on the balance sheet. A 2x4 to the head. The Japanese trading companies came after 20 years of quietly reviewing the Japan Company Handbook — a thick English-language compendium of Japanese public companies updated quarterly. Twenty years of reading with no action, then one enormous bet: $5 billion borrowed in yen at ~0.5%, deployed into five companies yielding 8-9% dividends. The companies doubled. The dividends doubled. The $5 billion became $10 billion paying $800 million a year. Nearly risk-free. The wait was the work.
Buffett borrowed $5 billion in Japanese yen at ~0.5% to buy five Japanese trading companies yielding 8-9% dividends; the stocks doubled and dividends doubled, producing an $800M/year cash return on an almost risk-free trade.
