Forget S&P, Bitcoin & AI, here’s where Mohnish Pabrai is putting his money in 2026

The Psychology and Temperament of Successful Investing

• It is believed that well under 1% of Americans who invest in stocks are good investors, and the key to success lies in having the right temperament, as investing is a game of transferring wealth from the active to the inactive, allowing even slightly above-average investors to get rich over a lifetime 10s.
• Many smart people make the mistake of lacking patience when it comes to investing, as great investment results often require waiting for extended periods, sometimes up to 3 or 5 years, and having the ability to reverse mistakes when necessary, with less activity often leading to better outcomes 4m6s.
• Investing in index funds can provide a great return without requiring a lot of work or knowledge of businesses, allowing individuals to be ahead of 90% of the crowd, and this approach can be taken by those who do not want to study businesses and pick individual stocks 6m42s.
• The concept of "the mistress is always hotter than the wife" is a mental model that warns investors against being tempted by unknown or unowned companies that may seem more attractive than the ones they already own, highlighting the importance of understanding the nuances of the companies they own 10m6s.
• Having a patient and disciplined approach to investing, like Mohnish Pabrai's friend Guy Spier, who is reluctant to take actions on his portfolio, can give investors a huge leg up in achieving their investment goals 14m6s.

Mental Models and Investment Wisdom

• The idea of the wife versus the mistress is a metaphor that suggests having a very high bar for action and being convinced unequivocally before making a decision, which is a difficult nuance to master in real life 10s.
• Raising one's standards in all aspects of life, including the people one surrounds themselves with and the investments they make, is crucial for personal growth and development 2m6s.
• Having relationships with people who are better than you can have a positive impact, as stated by Buffett, who says that if you hang out with people better than you, you get better, and if you hang out with people worse than you, you get worse 2m6s.
• Introducing randomness in life can lead to new experiences and opportunities, as seen in the example of stumbling upon Peter Lynch's book "One Up On Wall Street" at Heathrow Airport, which sparked an interest in investing 6m42s.
• Reading Peter Lynch's books led to discovering Warren Buffett, and subsequently, reading his biographies, Berkshire letters, and partnership letters, which opened up a new world of investing and led to attending the annual meeting, where new friendships were formed 8m30s.
• The experience of attending the annual meeting and meeting new people has been a significant one, with some of the most meaningful friendships formed as a result of introducing randomness into life 10m30s.
• When attending the annual meeting in Omaha, it's likely that the people sitting next to you on the plane are also going to the meeting and are above-average individuals, making it a good opportunity to start conversations and build connections 10s.
• The Buffett orbit, including Charlie Munger, has had a significant impact on life, and getting to know Munger's friends, who are high-quality people, has been beneficial, and building friendships with them has been an awesome experience 42s.
• Hanging out with people better than you and introducing randomness can be beneficial, and this concept is related to the Latticework of Mental Models, which involves putting different models together to achieve a huge leg up on humanity 2m6s.
• The Latticework of Mental Models can lead to Lollapalooza effects, where combining multiple models can result in exponential benefits, and this concept is important for achieving success 2m6s.

Cloning and Copying Successful Business Models

• Elon Musk's "idiot index" is a mental model that involves breaking down complex problems into raw materials and calculating their cost, which has allowed him to innovate and disrupt industries 4m30s.
• Humans are poor at cloning, and even though companies like Boeing and car manufacturers are aware of Elon Musk's strategies, they are unable to adopt them because it's not in their DNA 6m30s.
• Cloning can be beneficial, as seen in the story of the podcast setup, where the use of an LED wall and 3D film crew created a unique and engaging experience, and recognizing the importance of such details can be a valuable lesson 8m30s.
• Sam Walton, the founder of Walmart, was not exceptionally smart, but he was very hardworking and had no original ideas, as everything at Walmart was copied from other sources, including his meeting with Sol Price, the founder of Price Club, which inspired him to set up Sam's Club 10s.
• Sam Walton would often visit his competitors' retail stores, taking notes on what he saw, and he believed that anyone could learn from others, regardless of how well or poorly they were run, as he would often find a "golden nugget" of useful information 2m6s.
• Walton would also visit Walmart distribution centers early in the morning, talking to drivers and gathering information about the stores they visited, which helped him identify and fix problems 4m30s.
• The concept of cloning or copying successful ideas from others can be very effective, as seen in the example of Tesla's market cap compared to other car companies, and Elon Musk's approach to innovation at SpaceX, which has allowed him to surpass his competitors 6m40s.
• Introducing randomness into one's life can be beneficial, as seen in the example of attending an event outside of one's usual circle, such as a farmers conference, where new ideas and perspectives can be gained 10m20s.
• Mohnish Pabrai met Kevin VanTrump, the owner of a conference with 4,000 farmers in attendance, and learned that VanTrump had been writing a newsletter for farmers for 20 years, which included memes and market updates, and this inspired Pabrai to create a similar newsletter for crypto 10s.
• Pabrai and his team created a crypto newsletter called the Milk Road, which was half memes and half news, and they were able to build the largest crypto newsletter in the world in just one year and sell it for millions of dollars without hiring any employees 2m6s.
• The concept of cloning, or copying a successful business model, is discussed as a key to success, with the example of Burger King placing their restaurants across the street from McDonald's, and Pabrai notes that cloning can give a huge advantage 4m30s.

Market Dynamics and Valuation Opportunities

• Another important model is to take a simple idea and take it seriously, which is necessary for other models, such as cloning, to work, and Pabrai gives the example of his trip to Turkey, where he learned about the Turkish stock market and the high turnover of shareholders 6m40s.
• In Turkey, the average public company cycles through its float every 17 days, with 4% of shares trading daily, and Pabrai compares this to Berkshire Hathaway, which has a much slower turnover of shareholders, and notes that the Turkish market is dominated by gamblers and speculators 8m40s.
• Pabrai also compared the Turkish market to the Indian market and found that while Turkey is dominated by gamblers and speculators, the Indian market may have a different dynamic, although the specifics of the Indian market are not detailed 10m30s.
• In India, out of 5,000 public companies, there are only around 100 to 150 companies with good governance that are investable, and these companies trade at very expensive valuations due to extensive research by smart investors 10s.
• The valuation differentials between similar companies in different countries, such as a Coke bottler in India and one in Turkey, or an airport operator in India and one in Turkey, are massive, indicating opportunities for investment 42s.
• By focusing on a specific market, such as Turkey, and studying it in-depth, it is possible to find cheap companies, whether they are great or not, and make investments that cannot be made elsewhere in the world at similar valuations 2m6s.
• The concept of investing within one's circle of competence can be expanded by deliberately deciding to get smart about a new space, even if it was not previously within one's area of expertise, as seen in the example of studying the Turkish market 4m30s.

Case Studies in Investment Success and Mistakes

• Before investing in Turkey, research had already been done on companies like Coke and Pepsi bottlers, which are oligopolies with good businesses, and this knowledge was applied to similar companies in Turkey, such as the Coke bottler, which had a high-quality management team 6m10s.
• The introduction of randomness, or exploring new areas, is not in conflict with the concept of investing within one's circle of competence, but rather it is a way to grow and find new opportunities, and it can be done by using guardrails, such as focusing on simple businesses that are easy to understand 8m40s.
• The businesses that require the least amount of time to study tend to be the ones that make the most money, as they are often the simplest and most obvious, but it is still necessary to couple this with the introduction of randomness to find new opportunities 10m20s.
• Mohnish Pabrai's investment approach is highlighted, including a story about American Express and the salad oil crisis, where a crooked individual financed salad oil inventory that turned out to be seawater, resulting in a significant loss for Amex, 2m6s
• Warren Buffett's investment in American Express is discussed, where he put 40% of his fund into the company after the stock collapsed, due to his confidence in the Amex brand and its unaffected moat, 4m42s
• Buffett's research methods are described, including visiting restaurants to see if they had any concerns about accepting Amex cards, and he found zero concern, which reinforced his decision to invest in the company, 6m15s
• The story of Warren Buffett meeting Walt Disney and studying the Disney business by watching Snow White is shared, and how Buffett owned around 5% of Disney before selling it at a profit, 10m10s

The Role of Research and Observation in Investing

• The importance of first-hand research and observation in investing is emphasized, with examples of Buffett's methods being compared to journalism and gut instinct, rather than just relying on spreadsheets and financial models, 14m20s
• The idea that great investing involves more than just finance and numbers is introduced, with the suggestion that traits like research, observation, and intuition can lead to successful investments, 16m30s
• Investing should be simple, and every investment thesis should be explainable to a 10-year-old in four sentences, making it easy to understand the core concept of the investment 10s.
• With approximately 50,000 stocks worldwide, it is impossible for anyone to know all the companies, and a large percentage, around 90-98%, should be placed in the "too hard" pile, as Warren Buffett does with a box on his desk labeled "too hard" 2m6s.
• Most businesses have two main problems: they are either outside one's circle of competence or too hard to understand, requiring investors to be honest with themselves and acknowledge their limitations 2m6s.
• Peter Lynch's approach to finding investment opportunities involves making a list of the products and services one uses and studying the companies behind them, as many are publicly traded and it is difficult for a company to get consumers to part with their money 4m30s.
• Investors have the luxury of waiting for the perfect pitch, unlike baseball players, and should only act when the conditions are favorable, allowing them to let many opportunities pass without taking action 6m20s.
• Successful investors like Warren Buffett spend most of their time studying businesses, and their activity is often below the surface, only becoming visible when they make a move, much like a whale swimming underwater 8m10s.
• The key to being a good investor is to enjoy the process of studying and turning the pages, one after the other, as exemplified by Warren Buffett's story of gathering and studying discarded horse racing tickets as a child 10m30s.

Finding Undervalued Opportunities

• Mohnish Pabrai's investment approach involves looking for anomalies, and he has been inspired by Warren Buffett's method of going through financial manuals to find undervalued companies, such as when he found Western Insurance, a company with a stock price of $15, but with $25 in earnings and $40 in cash on the balance sheet, which is an example of a deal that "hits you in the head like a 2x4" 2m6s.
• Pabrai has also invested in five Japanese trading companies, which he found by going through the Japan Company Handbook, a publication that lists two public Japanese companies per page, and these companies had a dividend of 8% or 9%, allowing him to borrow money at a low interest rate and earn a high return 4m30s.
• Pabrai's investment in the Japanese trading companies was a huge success, with the companies doubling their dividend and the stock price doubling, resulting in a significant increase in value, from $5 billion to $10 billion, with an annual payout of $800 million 6m40s.
• The nature of investing is a continuous activity that requires a certain temperament, with the potential for huge payoffs for those who enjoy looking for undervalued companies, and the current market environment, with many people engaging in speculative activities, can create opportunities for value investors like Pabrai 10m20s.

The Dual Nature of Stock Markets

• The stock market can be seen as a combination of a church, where companies raise capital to pursue their goals, and a casino, where people engage in speculative activities, and the increase in casino-like activity can create opportunities for wealth transfer from hyperactive investors to more patient and disciplined investors like Pabrai 12m10s.
• The British government banned public markets for 200 years after the South Sea bubble, but great businesses were still created in the UK and capital found its way to them, indicating that public markets are not the only way for businesses to access capital 10s.
• The main purpose of stock exchanges, such as the New York Stock Exchange and the Hong Kong Stock Exchange, is to allow capital to flow into companies like Tesla and SpaceX, which can improve the lives of people, but this also leads to casino-like activity, which can have negative effects on humanity 1m5s.
• According to the New York Times, 0.1% of public market users have 60% of the profits, with 2,000 traders making around half a billion dollars, which represents a significant wealth transfer from casual gamblers to more knowledgeable and selective traders 2m6s.
• The house edge in games like horse racing is around 21%, whereas in games like blackjack, the house edge is around 0.2-0.4%, making it more favorable for gamblers, but there are still people who make a living betting on horses by identifying odds that do not make sense 3m30s.
• In polymarkets, people can make money by betting against other bettors, similar to horse racing, where knowledgeable bettors can identify mispriced odds and take advantage of them 5m15s.

Learning from Warren Buffett and Mohnish Pabrai

• Mohnish Pabrai paid $650,000 to have lunch with Warren Buffett in 2007, which he felt was worth it, as Buffett aimed to deliver tremendous value to those who paid for the lunch, and Pabrai was able to ask him over 50 questions and gain valuable insights 7m30s.
• During the lunch, Warren Buffett demonstrated his skill in taking simple questions and providing valuable and insightful answers, which Pabrai found very useful and memorable, even 20 years later 10m40s.
• Warren Buffett and Charlie Munger were partners with Rick Guerin for several decades, but Rick disappeared from the public eye, and when asked about him, Warren explained that Rick was in a hurry to get rich and used leverage, which led to his downfall during the 1973-1974 stock market correction, and Warren bought Rick's Berkshire shares for $40, which are now worth $700,000 10s.
• Warren Buffett emphasized the importance of living life with an inner scorecard, measuring oneself with internal metrics rather than external ones, and being true to oneself, rather than seeking external validation, which is a fundamental mental model 4m30s.
• To live life with an inner scorecard, one must be able to withstand external criticism and not be swayed by external inputs, and it's essential to understand that even remarkable individuals like Gandhi and Buffett face criticism, so it's not uncommon to face criticism when having a public presence 8m40s.
• Berkshire Hathaway has a significant amount of cash, around $380 billion, which will likely be put to work when opportunities arise, and the company's history shows that cash builds up and then is invested, and it's possible that in 5 years, the cash may be half or less of what it is today 12m10s.
• Berkshire Hathaway is now run by a great operator and a pretty good capital allocator, and the company will likely receive phone calls with potential investment opportunities, which can lead to great deals, as Warren Buffett used to say that when they call you on a Saturday, that's when you know you're going to make a great deal 14m40s.

Investment Strategies and Patience

• Mohnish Pabrai's investment approach involves having extreme patience with extreme decisiveness, similar to standing by a stream with a spear waiting for a salmon to pass by, and then acting fast when the opportunity arises 42s.
• Pabrai had two investments that became more than 100-baggers, with one increasing by 140 times and the other by 100 times, before he started his funds, and these investments helped grow his initial $1 million to around $14 million 2m6s.
• One of Pabrai's recent successful investments is in a Turkish company called Reysas, a warehouse operator, which was bought at around 3% of its liquidation value and is now nearing a 100-fold increase in value 4m30s.
• The investment in Reysas was made possible by a misunderstanding in the market, where the company's stock price did not reflect its true value, with a market cap of $15-16 million and a liquidation value of around $800 million 6m10s.
• Pabrai looks for investments in hated and unloved companies, or where people have confused risk with uncertainty, and the Turkish market provided such an opportunity due to its unique circumstances 8m20s.
• The owners of Reysas did not prioritize the stock price, instead focusing on the company's operations and growth, which allowed Pabrai to buy in at a low valuation 10m30s.
• Pabrai also mentions another Turkish company that was trading at a price-to-earnings ratio of 0.1, meaning its market cap was equal to just one month's earnings, highlighting the distortions in the market 14m10s.

Navigating Risks and Market Distortions

• Mohnish Pabrai was considering investing in one of the largest banks in Turkey, which had a price-to-earnings ratio of 0.1, but decided against it due to the bank's violation of UN sanctions and the resulting legal issues, including the arrest of the company's CFO in New York 10s.
• The situation in Turkey, with its crazily priced assets, led to the decision to take a simple idea seriously and look for opportunities, with many potential winners having thrown away their chances, making it easier to find good investments 2m6s.
• Mohnish Pabrai recalled a company in Turkey that was allowed to go up 10% a day, and he instructed his broker to buy every available share, without worrying about volumes, and was offered 5% of the company by Templeton funds for $1 million 4m42s.
• The decision by Templeton funds to sell their stake in the company was likely due to concerns about the unstable currency and high inflation in Turkey, which can be detrimental to investments, but Mohnish Pabrai used other mental models to guide his decision-making 6m15s.
• One of the mental models used was the idea that certain companies, like Coca-Cola, are not dependent on inflation or exchange rates, as they provide a benefit that people will trade for, regardless of the currency or economic conditions 8m30s.
• When considering a warehouse company, Mohnish Pabrai thought about the fact that a warehouse is made up of land, paint, cement, and steel, all of which are inflation-indexed, making the currency and exchange rate less of a concern, especially since the assets were located in a prime city 10m50s.

The Power of Inflation-Indexed and Currency-Independent Businesses

• Mohnish Pabrai invested in a company in Turkey, which was immune to inflation, and due to the collapse of the lira, his investment increased 90 times in dollars over seven years 10s.
• He also invested in TAV Airports, a company listed on the Istanbul Stock Exchange, which had all its revenue in euros, making it less affected by the currency fluctuations in Turkey, and was available at a low price-to-earnings ratio of around four times 2m6s.
• Pabrai used a few key models to make his investment decisions, including understanding that some businesses are naturally immune to inflation, and that people will always want certain products, such as Coca-Cola, regardless of economic conditions 2m6s.
• He believes that studying businesses and investing is an intellectual sport, but notes that many people, even smart ones, lose money doing it, and that it can be challenging to beat the market, as evidenced by his conversation with Cathie Wood, who has not beaten the S&P despite being smart and having good theories 10m42s.

Long-Term Investment Performance and Track Records

• Pabrai's track record shows that his oldest fund, which is over 27 years old, has turned every dollar into about $30, demonstrating his ability to beat the market over the long term 20m42s.
• The S&P has done well, with an average annual return of 19% over the last two and a half years, but the ETF has done better in the last year, beating the S&P by more than 20 points 10s.
• It took the ETF some time to get properly invested, but it is expected to be ahead of the S&P in the long term, such as after 5 or 10 years, due to the S&P's current overvaluation 2m6s.
• The US stock market has seen 4% of companies deliver the market return over the last 90 years, with the other 96% treading water, which is why indices do well because they include the successful 4% 4m42s.
• Warren Buffett's success rate is 3 to 4%, with 12 investments out of over 400 creating Berkshire Hathaway's value, demonstrating that index investing can be a good option because it captures the successful companies without needing to think about individual investments 6m15s.
• Experience is a significant advantage in investing, as it allows investors to get better over time, see more patterns, and expand their circle of knowledge, which is why not selling the winners is crucial, as seen in Berkshire Hathaway's success with companies like Coke and Apple 10m10s.
• The key to successful investing is not avoiding mistakes, but rather not selling the winners and allowing them to continue growing, which is illustrated by the concept of "circle the wagons" and the importance of riding the winners 12m20s.

Understanding Competitive Advantages and Moats

• Capitalism is brutal, and almost every business will eventually go to zero due to comparative destruction forces, making it essential for investors to understand this reality and make informed decisions 14m50s.
• A brand can build a moat over time, such as McDonald's, which started with no moat but now has a recognizable brand that attracts customers, even if other options are available, 10s.
• Some moats can become enduring for a long time, like FICO scores, which started with no moat but now are widely used and entrenched, making it difficult for people to switch to alternative options, 2m6s.
• Investors have the advantage of buying into existing moats, such as a Turkish warehouse operator, which has prime warehouses in Istanbul and benefits from increasing demand for warehouses in an e-commerce world, 4m6s.
• The goal is to look for businesses with moats that have staying power, such as airport operators or Coke bottlers, and to own parts of those enduring moats, 6m6s.

Evaluating New Technologies and Market Trends

• When it comes to new investments, such as AI, it's essential to consider the toll bridges that companies like Alphabet and Meta need to pass through, like TSMC, ASML, and Micron, but it's not necessary to invest in these areas if they are outside one's circle of competence or too expensive, 10m6s.
• Instead of investing in AI or other new technologies, it may be more beneficial to focus on established businesses with strong moats, like the Turkish warehouses, which are less likely to be disrupted by new technologies, 12m6s.
• Vertical SaaS companies are currently hated and unloved, making them a potential area of opportunity for investors, as they are less likely to be replaced by AI software, and some great businesses in this area are on sale, 16m6s.
• The idea that companies will develop their own software to replace existing SaaS companies, like Workday, is unlikely, making investments in this area more attractive, 18m6s.
• The market does not fully understand that software is not just coding, and coding is automated and will become even faster, but it may only be a small part of the overall software industry, and this misconception may lead to incorrect assumptions about the future of companies like Adobe, which will likely reduce costs due to automation but may not need to reduce prices, 10s.

Investing in Efficient Business Models

• Incumbent companies, such as Adobe, will have an advantage due to their ability to reduce costs through automation, and they may not need to reduce prices, which means their cash flows may not decrease, 42s.
• An investment strategy focuses on the Mark Leonard universe of businesses, specifically Constellation, which has a unique business model that allows it to acquire and integrate numerous vertical market software companies, with a large M&A team that buys companies at a rate of about one every three days, 2m6s.
• Constellation's business model involves buying companies, typically at a price of around five or six times cash flow, and then increasing their efficiency and revenue through best practices and synergies, resulting in an effective price of around three or four times cash flow within a year or two, 4m30s.
• The companies acquired by Constellation are not dying, but rather still growing at a rate of around 3% per year, which makes them attractive investments, especially considering the current interest rates, and a price of 15 times cash flow could be justified for a business with a 3% annual growth rate, 6m40s.
• The math behind this investment strategy involves comparing the return on investment of buying a company to the return on investment of putting money in treasuries, and considering the risks and growth potential of the company, a price of 10-15 times cash flow could be a good deal for a company with a stable and growing cash flow, 10m20s.
• Mohnish Pabrai is investing in a company called Constellation, which buys businesses with a specific kind of efficiency, allowing them to reinvest cash flow at a 25% rate, and this model is delegated, with teams able to make deals without headquarters' approval, up to $20 million, 10s.
• Constellation's business model is considered superior to Berkshire Hathaway's because it focuses on one kind of business and has a delegated approach, allowing for more efficient integration of acquired companies, 1m42s.
• The company's cash flow is growing at 20-25% per year, making it a valuable investment, with a potential price of 40-50 times cash flow if the growth continues, but it has come down to a lower multiple, making it attractive to investors like Mohnish Pabrai, 2m6s.
• Private equity firms are not interested in buying and holding small companies like the ones Constellation targets, due to the high frictional costs and the desire to flip companies for a profit, leaving little competition for Constellation, 3m30s.

Making Favorable Bets and Managing Risk

• The investment strategy is based on making favorable bets, with the understanding that not all of them will work, but if half of them are successful, it will be a home run, and even if 40% work, it will still be a successful investment, 5m10s.
• The 4% rule of Warren Buffett is mentioned, where only 4% of his bets work, but in this case, if half of the investments are successful, it will be a significant return, and the goal is to keep making favorable bets to achieve long-term success, 6m20s.
• There are potential risks to the investments, such as unknown factors that could cause them to fail, but they are considered low-probability events, and the investments are still seen as favorable bets, 8m0s.
• Howard Marks' perspective on the S&P 500 is mentioned, suggesting that it may be a bad bet for the next 10 years due to its current high P/E ratio, which has historically been associated with low returns over the next decade, 9m30s.

Market Outlook and Emerging Investment Opportunities

• The current outlook on the S&P index is bearish, and the best thing since sliced bread is considered to be GLP-1s, with Ozempic and other GLP-1 drugs generating double the revenue of AI companies, around $79 billion a year, compared to $40 billion for AI 10s.
• From an investor's point of view, industries with rapid change, such as GLP-1s, are considered the enemy of the investor, as they can be unpredictable and volatile, with new developments like tablets emerging, but facing challenges like having to go through the liver 2m6s.
• Gold is considered a simpler investment option, and Bitcoin is viewed as too hard to understand and is associated with scammers and ransom seekers, making gold a preferred choice over Bitcoin 4m42s.

Living a Purposeful and Aligned Life

• The idea of "don't die at 25 and get buried at 75" means to keep growing, learning, and pursuing passions throughout one's life, as exemplified by Charlie, who made investments and decisions ignoring his mortality, even at the age of 99.9 10m10s.
• The phrase "get your music out" means to understand who you are, what you want to bring to the world, and to pursue your passions and talents, making the world better and giving you a sense of accomplishment, as everyone has special talents and something unique to offer 14m20s.
• Mohnish Pabrai has a unique approach to life, where he believes in living every day to the fullest, and he quotes Gandhi, saying "Live as if you were to die tomorrow, Learn as if you were to live forever," and also references Steve Jobs, who would make a change if he spent a few days doing something he didn't love 10s.
• Pabrai suggests that people should not make long-term plans, but instead enjoy every day, and he uses the analogy of Warren Buffett saying "that's like saving sex for old age," to emphasize the importance of living in the moment 4m30s.
• He believes in pursuing one's passions and working with people they like, admire, and trust, and considers this essential for living a fulfilled life, much like taking care of one's physical health 6m20s.
• Pabrai also studies great investors and their strategies, and one of his favorite investors to study is Ed Thorp, a mathematician who used his knowledge to develop a basic strategy for playing Blackjack and counting cards 8m40s.

Learning from Legendary Investors and Their Strategies

• Ed Thorp's story is one of using intelligence and strategy to gain an edge, as he used MIT's mainframe computer to figure out how to optimally play Blackjack, and he was able to clean out casinos in Vegas and Reno by counting cards and adjusting his bets accordingly 10m10s.
• Ed Thorp wrote a book called Beat the Dealer, which sold millions of copies and revealed how to beat casinos at Blackjack, leading to changes in the game's rules, such as introducing multiple decks and not playing to the end of the shoe 10s.
• Thorp then discovered that the New York Stock Exchange was a better "casino" than Vegas and learned how options were priced, even before the creation of the Black-Scholes formula, which earned its creators a Nobel Prize 2m6s.
• He set up an entity called Princeton-Newport Partners, which achieved high returns of 25-30% per year with no down years, and later became a professor at UCI and invested with Ken Griffin, the founder of Citadel 4m30s.
• Thorp also invested with Warren Buffett after meeting him for bridge in the 1970s and has had a successful career, earning him a legendary status in the investment world 6m15s.
• The speaker met Ed Thorp at a racquetball club in Irvine, California, and was excited to learn that the older man he was talking to was the famous investor, leading to a meeting for lunch and a continued acquaintance 8m45s.
• Ed Thorp also developed a device to beat roulette, which involved wearing a special device that could predict the outcome of the game 12m10s.

The Legacy of Ed Thorp and Ken Griffin

• Ken Griffin, the founder of Citadel, was spotted by Ed Thorp as a talented investor, and the speaker met Griffin around 2000, learning about his unique abilities and the "Ken Griffin lore" 14m20s.
• Mohnish Pabrai has a lot of respect for Ken Griffin, the founder of Citadel, who is described as a very intense and smart guy, and Pabrai thinks he has found all the different nooks and crannies to build a tremendous business 10s.
• Ken Griffin's intensity is illustrated through stories, such as when he hired a temp to guard a Russian mathematician who was working on algorithms, and the temp's job was to make sure no one bothered the mathematician 1m20s.

Discovering and Pursuing One's Calling

• Another story about Ken Griffin is that when Enron was going out of business, he went on a "rescue mission" to hire the smartest traders, and he also made an offer to a new grad from Harvard, but then asked him to reject the offer because he didn't want someone who would quit at 25 3m40s.
• The importance of leading an aligned life is emphasized, and it is stated that who we are is hard-coded at the age of five, based on our genetics and experiences during the first five years of life 6m30s.
• After the age of 12, the only thing that can be controlled is who our peers are, and to have a great life, it is necessary to understand who we are and follow our inner calling, which can be discovered by paying attention to what we enjoy doing and who we enjoy meeting 8m10s.
• It is suggested that people may be in the wrong profession or activity, and that they need to find what truly fits them, such as a lawyer who was meant to be an artist, or a musician who was meant to be a running back 10m20s.
• Getting to an aligned life is the most important thing, and it's worth pursuing, however painful it may be, to understand one's calling as early as possible in life, and this can be achieved by going through psychological tests with a psychiatrist or by figuring out what one loves to do and what energizes them 10s.
• A shortcut to understanding one's calling is to go through a full life 360 analysis with a professional like Jack Skein, who can help individuals understand who they are and what they are supposed to be doing, although he can only take on a limited number of clients per year 4m42s.
• The human brain is set up to start specializing after the age of 11, and individuals like Michelangelo, Warren Buffett, and Bill Gates were able to find their calling and specialize in their areas of interest at a young age, despite being in a world that encourages being a jack-of-all-trades 8m10s.
• Parents play a crucial role in helping their children discover their calling by providing them with opportunities to explore their interests and increase the time they spend on activities they enjoy, as seen in the example of Bill Gates who spent thousands of hours coding at a young age 11m30s.
• Reflecting on one's past interests and activities can also help individuals discover their calling, as seen in the example of someone who enjoyed playing games with scores and doing improv at a young age, which can be an indication of their true passions and strengths 14m20s.
• Understanding one's calling and living an aligned life is more important than being a great investor or finding great investments, and it's essential to focus on finding what one loves to do and doing it well, rather than following what the world expects 17m10s.

Gratitude and the Impact of Mentorship

• Mohnish Pabrai is credited with teaching valuable business lessons, with the individual expressing gratitude for the education they received from him, which they felt was more impactful than their MBA 10s.
• The individual met Mohnish Pabrai for dinner at the Delamar Hotel in Greenwich, Connecticut, where they were introduced to various books, including "Power vs. Force" by David Hawkins, "The Story of My Experiments with Truth" by Gandhi, and "Influence: The Psychology of Persuasion" by Robert Cialdini 42s.
• The individual was impressed by Mohnish Pabrai's ability to put ideas into practice in his own life, and realized that they were a conventional thinker, whereas Mohnish Pabrai had an unusual mind that knew how to get things done in the real world 2m6s.