AI summary and analysis
Pabrai's classic speech at Morningstar India systematically talked about the ten principles of investment management, including no fixed management fees, small teams, accepting error rates and looking for extreme misprices.
Key points
- This is one of Pabrai's classic public speeches, directly addressing the issues of incentives and behavior in the investment management industry.
- He advocated not “skim off the top” in terms of asset size and emphasized that the fee structure will strongly affect the behavior of fund managers.
- He argued against large investment teams, citing the examples of Buffett and Munger to illustrate that a few key judgments often do not require complex organization.
- He accepted that there would be a high error rate in investing, so the emphasis was on making the odds and rewards of a correct decision sufficient to cover errors.
- "Hidden PE of 1" and "never use Excel" exemplify Pabrai's preference for simple, obvious, long odds odds.