Mohnish Pabrai is an Indian-American businessman and investor. For a number of years, he turned heads with the performance of Pabrai Investment Funds since its inception in 1999. Pabrai has high regards for Warren Buffett and admits that his investment style is copied from Buffett and others. Over the next few weeks, we’ll be exploring the topics in his book about value investing.
In this, the final chapter, Pabrai begins with a fable that illustrates the importance of focusing on companies within one’s circle of competence. Investors can pick and choose from hundreds of thousands of companies (both public and private), real estate, currencies, mutual funds, options, hedge funds, treasuries, commodities and other investments. If the investor were to try his hand at all of them, he is not likely to do well. But by focusing on simple, easy-to-understand businesses, the investor increases his odds.