Mohnish Pabrai in his book also taught about investing under extremely uncertain times where the range of outcome is very wide, but in his teachings he have the probabilistic cash flows, which are near impossible UU situations.
“Heads I win, Tails I won’t lose much”
We are looking for potential upside with disproportionate/non-linear payoffs, but it should be coming with less probability of permanent capital loss.
One thing which I found is, it is like a pattern. Many businesses hammered down like valeant pharma, fannie mae and freddie mac, lehman, manpasand, tanla, 8k miles, bhushan steel, wirecard, FTX etc. These businesses usually do not have protected returns + They represent small part of the bigger picture + They are just nice to have in market + adding low value + and present in intensively competitive market.
Business which have rebounded and in which our super investors have taken the gamble like Google, Adani, Wells Fargo, Gieco, Petrobras, American express, Amazon, stelwart, Ajay Piramal bet on pharma in 2008, they all were representing a bigger part of value chain or market or they are adding real value to the market. It is like they have built a real moat, adding some value for other players and market as a whole.
In essence, all of those bets have little to loose, but big payoffs
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