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The Thinking Investor

@IrrationalMrkts

Sep 22

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Mohnish Pabrai is best known for extracting maximum value from investments. In 2022 he put together a masterclass on why he prefers multi-baggers. These 5 lessons will help increase wealth by boosting your compounding engine. Here’s a breakdown of each one: 🧵👇

Tip #1: Focus intensely on what you are looking for Many investors will attempt multiple investing paths (special situations, spawners, PE of 1's etc.) These all work, but Mohnish says to focus on just one. Make sure you have a high degree of clarity of your search parameters.

Tip #2: Long holding times result in less taxes Too many people trade stocks, rarely keeping anything for longer than a year. The amount of taxes you pay may seem small, but Mohnish says if you keep that money compounding, you can massively bump your returns. So avoid taxes.

Tip #3: You don't need a large flow of new ideas Finding great businesses is hard. So instead of trying to keep finding new ones, Mohnish suggests holding onto the best ones for a decade or more. This gives you more spare time, and less stress trying to find a new investment.

Tip #4: You can hold stocks when they are over valued A lot of value investors sell stocks when it gets to a price that they wouldn't buy it at. Pabrai says this is a mistake. Great businesses will inherently be expensive more often than cheap.

Only sell when they're in bubble territory. This allows you to reap the maximum amount of money to compound as the company continuously produces profits for its owners. If you want multi-baggers you'll have to hold them through both valleys and peaks.

Tip #5: It keeps your focus on the future 95% of investors are trying to make money in 3-12 months. Invest in stocks that can compound money for decades instead of aiming for short-term gains. Having long time horizons protects you from common market mistakes.

TL;DR - 5 tips from @Mohnish Pabrai that will drastically improve investment returns - Focus and clarity - Pay less taxes = increased compounding - Long holding periods reduces need for new ideas - Hold great companies even when overvalued - The above forces a long-term mindset

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The Thinking Investor

@IrrationalMrkts

Sep 22View on Twitter

Mohnish Pabrai is best known for extracting maximum value from investments. In 2022 he put together a masterclass on why he prefers multi-baggers. These 5 lessons will help increase wealth by boosting your compounding engine. Here’s a breakdown of each one: 🧵👇

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@IrrationalMrkts

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