Mohnish Pabrai Lecture at Univ. of California, Irvine (UCI), May 24, 2016

In this talk, Mohnish discusses the three basic attributes an investor should possess to effectively beat the odds. 1. Patience 2. Decisiveness and 3.Being different from the crowd.

Mohnish reviews the multiple mental models behind Berkshire’s investment in Coca-Cola. Buffett’s lessons from his See’s Candies investment played a major role in his decision to invest in Coca-Cola.

Some of the factors that influenced Buffett’s investment in Coca-Cola include:
1. Coca-Cola was naturally a global company while Buffett had failed to make See’s Candies global.
2. The Coca-Cola drink lacks an after taste and that means one has the ability to consume Coke repeatedly, significantly more than candy.
3. Warren and Charlie read every annual report since Coca-Cola went public. Their insight was that unit case volume of Coke went up every single year despite the wars, stagflation and economic depression. They came to the conclusion that Coke was bullet proof.
4. Humans are creatures of habit and cannot change their habits especially when it comes to personal spaces like the mouth. This keeps competition at bay.

Mohnish also talks about several mental models used by Coca-Cola to advertise its products, including:

The Association tendency – Advertisements position Coke in an image where people are happy. Coke is associated with celebrities and major events around the world.

Social Proof tendency – Coca-Cola advertisements almost always try to show people having a good time with Coke.

00:00:00 Introduction
00:04:15 Traits of successful people
00:08:37 How do you make investment?
00:12:38 Buffett’s See’s Candies Investment
00:19:21 Difference between See’s candies and Coke
00:24:00 Long runway of Coke
00:34:15 Coca-Cola Model
00:44:19 Mental Model on Branding
00:52:40 Coke’s Management
01:02:52 Mental Model on How Human brains are screwed up
01:05:25 What not to do
01:13:00 Holy grail of investment
01:15:05 What’s a great business?
01:18:05 What Mohnish do as value investor
01:25:10 Biggest mistake as an investment
01:29:25 Indexing investing
01:32:00 Key to becoming wealthy
01:37:10 Insurance company business
01:39:22 Cloning
01:41:55 Pabrai Fund Model
01:45:10 TransTech
01:51:26 Challenge as an investor
01:56:20 Dakshana Foundation
02:00:50 Portfolio Diversification
02:03:08 Cash vs. Opportunities
02:10:20 Businesses that Mohnish admire
02:17:30 Doing what you love

The contents of this video are for educational and entertainment purposes only, and do not purport to be, and are not intended to be, financial, legal, accounting, tax or investment advice. Investments or strategies that are discussed may not be suitable for you, do not take into account your particular investment objectives, financial situation or needs and are not intended to provide investment advice or recommendations appropriate for you. Before making any investment or trade, consider whether it is suitable for you and consider seeking advice from your own financial or investment adviser.