According to Einstein

Always write your thesis down. If it takes more than a short paragraph, there is a fundamental problem. If it requires me to fire up Excel, it is a big red flag that strongly suggests that I ought to take a pass.

Mohnish Pabrai

Notes and Quotes from The Dhando Investor – Mohnish Pabrai, published 2007, 209 pages.

There were virtually no Patels in the United States just 35 years ago. Less than one in five hundred Americans is a Patel. Over half of all the motels in the entire country are owned and operated by Patels.

Patels, as a group, today own over $40 billion in motel assets in the United States, pay over $725 million a year in taxes, and employ nearly a million people.

Dhan comes from the Sanskrit root word Dhana meaning wealth. Dhan-dho, literally translated, means “endeavors that create wealth.”

Dhandho is all about the minimization of risk while maximizing the reward.

If an investor can make virtually risk-free bets with outsized rewards, and keep making the bets over and over, the results are stunning.

The first few Patels arrived from Africa in the early 1970s. The reason we end up with concentrations of ethnic groups in certain professions is that role models play a huge role in how humans pick their vocations.

“Few Bets, Big Bets, Infrequent Bets.”

“Heads, I win; tails, I don’t lose much!”

The Dhando approach

1. Focus on buying an existing business.
2. Buy simple businesses in industries with an ultra-slow rate of change.
3. Buy distressed businesses in distressed industries.
4. Buy businesses with a durable competitive advantage—the moat
5. Bet heavily when the odds are overwhelmingly in your favor.
6. Focus on arbitrage.
7. Buy businesses at big discounts to their underlying intrinsic value.
8. Look for low-risk, high-uncertainty businesses.
9. It is better to be a copycat than an innovator.

We see change as the enemy of investments . . . so we look for the absence of change. We don’t like to lose money. Capitalism is brutal. We look for mundane products that everyone needs.1 —Warren Buffett

Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives reliable results. —Warren Buffett

The entrance strategy is more important than the exit strategy. —Eddie Lampert

Arbitrage is as an attempt to profit by exploiting price differences in identical or similar financial instruments.

Minimize downside risk before ever looking at upside potential.

This is not so much a book review as a summary of key quotes and my notes of the book “The psychology of money” by Morgan Housel

Financial outcomes are driven by luck, independent of intelligence and effort. Financial success is not a hard science. It’s a soft skill, where how you behave is more important than what you know. I call this soft skill the psychology of money. The aim of this book is to use short stories to convince you that soft skills are more important than the technical side of money.

To grasp why people bury themselves in debt you don’t need to study interest rates; you need to study the history of greed, insecurity, and optimism. To get why investors sell out at the bottom of a bear market you don’t need to study the math of expected future returns; you need to think about the agony of looking at your family and wondering if your investments are imperiling their future.

Be careful who you praise and admire. Be careful whom you look down upon and wish to avoid becoming.

Therefore, focus less on specific individuals and case studies and more on broad patterns.

You’ll get closer to actionable takeaways by looking for broad patterns of success and failure. The more common the pattern, the more applicable it might be to your life.

Nothing is as good or as bad as it seems.

The hardest financial skill is getting the goalpost to stop moving.

“Enough” is realizing that the opposite—an insatiable appetite for more— will push you to the point of regret.

There are a million ways to get wealthy, and plenty of books on how to do so. But there’s only one way to stay wealthy: some combination of frugality and paranoia.

Getting money requires taking risks, being optimistic, and putting yourself out there. But keeping money requires the opposite of taking risk. It requires humility, and fear that what you’ve made can be taken away from you just as fast. It requires frugality and an acceptance that at least some of what you’ve made is attributable to luck, so past success can’t be relied upon to repeat indefinitely.

More than I want big returns, I want to be financially unbreakable. And if I’m unbreakable I think I’ll get the biggest returns, because I’ll be able to stick around long enough for compounding to work wonders.

Planning is important, but the most important part of every plan is to plan on the plan not going according to plan.

A barbelled personality—optimistic about the future, but paranoid about what will prevent you from getting to the future—is vital.

“I’ve been banging away at this thing for 30 years. I think the simple math is, some projects work and some don’t. There’s no reason to belabor either one. Just get on to the next.” —Brad Pitt accepting a Screen Actors Guild Award

Anything that is huge, profitable, famous, or influential is the result of a tail event—an outlying one-in-thousands or millions event. And most of our attention goes to things that are huge, profitable, famous, or influential. When most of what we pay attention to is the result of a tail, it’s easy to underestimate how rare and powerful they are.

Money’s greatest intrinsic value—and this can’t be overstated—is its ability to give you control over your time. To obtain, bit by bit, a level of independence and autonomy that comes from unspent assets that give you greater control over what you can do and when you can do it.

Controlling your time is the highest dividend money pays.

Wealth is what you don’t see.

The first idea—simple, but easy to overlook—is that building wealth has little to do with your income or investment returns, and lots to do with your savings rate.

Past a certain level of income, what you need is just what sits below your ego.

Sunk costs—anchoring decisions to past efforts that can’t be refunded—are a devil in a world where people change over time.

“Every job looks easy when you’re not the one doing it” Jeff Immelt

Optimism is a belief that the odds of a good outcome are in your favor over time, even when there will be setbacks along the way.

The more you want something to be true, the more likely you are to believe a story that overestimates the odds of it being true.

Everyone has an incomplete view of the world. But we form a complete narrative to fill in the gaps.

If you want work flexibility you can

1. Work for a small company and get paid less. OR

2. Work for a large company and get paid well. But commute 3-4 days a week.

Notes from my discussions with multiple industry analysts and reading many reports.

There are multiple changes happening with autombiles:

1. Move to software-defined cars for “features” to be bought as subscriptions
2. Move to electric vehicles from internal combustion engines
3. Autonomous car technology
4. Electrification of the charging network
5. The growth of China as the leading EV and automobile producer (vs. Japan and Germany in the last 4-5 decades

The challenges:

1. Availability of raw materials – Nickle, rare earths, etc.
2. Supply chain security
3. Affordability

In 2022, electric vehicles (EVs) took 11% global market
share (up from 6.5% in 2021), expecting 20% penetration by 2025
and the most aggressive for 100% by 2030.

Globally, we now expect battery electric vehicles (BEVs) to reach 40% penetration by 2030, and xEVs to reach 80% by 2035.

EV forecast calls for battery capacity to rise from ~600GWh in 2022 to 2,700GWh by end of 2030.

China has seen new energy vehicle (NEV) adoption become increasingly consumer-driven, with the country blowing past NEV penetration targets — the government sought to achieve ~20% penetration by 2025; it saw 23.5% in the first eight months of 2022. Chinese buyers seem to
favor domestic EVs over foreign (German and Japanese) brands though, leaving foreign OEMs potentially playing catch-up with domestic brands.

China represented close to 40% of the global battery
equipment market in 2021, up from 10%+ during 2016-19. Explosive growth over the past three years has been driven by sharply increasing investment in new energy industries.

Range anxiety over the switch from ICE to EVs has long been cited as a common impediment to greater EV adoption.

Have you seen this image where Apple iPhone has replaced so many things we used before?

Here’s the image for what all AI Mid Journey will replace