Hello and welcome to our show. >> Thank you so much. It's my pleasure to be here. >> Oh, the pleasures are all ours. Would you like to say a quick hello to our viewers before we start? >> Hello. Good to be here. >> Tell us a little bit about you and what you do. >> Well, I'm a money manager. I manage about $1.4 billion mainly in publicly traded equities around the world. And I do it, you know, in a combination of private hedge funds and an ETF. And I've been doing this for about 28 years. It's time has gone by very fast because it's my passion. So I don't even think I'm doing work. I follow Warren Buffett and Charlie Mer's approach to investing which generally means that we think of stocks as portions of businesses. We don't think of them as pieces of paper. And when we are going to buy a stock, we approach it as if we were going to buy the whole company. And so we're basically looking for investments that we can hold ideally forever. >> Forever. >> Forever. Anytime we have to sell something, we have made a mistake. And let me go one step further. Anytime most market participants are selling anything, they have made a mistake. >> So we have to really keep it for the long run, right? According to your philosophies. Okay. So you are a very well-known value investor. Um let's start with talking about that famous lunch since you mentioned Warren Buffett. You won that lunch at an annual charity auction for 650k, which is a lot of money, which was the record at the time. Um, looking back, was it worth every penny? >> Yeah, the lunch from my point of view was one of the best deals ever. It was a true bargain in terms of >> bargain. >> It was a bargain when you look back now for what transpired after that. Warren has stopped doing these lunches. He was doing one of these >> lunches every year. The last year when he did the lunch, it went for more than $26 million, which was a I think 2 three years ago. >> And so our 650,000 bid was a very small portion of that. So that was pretty good. And the the second reason it was a bargain and even the reason why I was interested in bidding for it and having lunch with Mr. Buffett was for a couple of reasons. If we were alive in the time of Gandhi or Newton or Einstein or you know any other luminaries who have come before us Churchill and so on and if we had a chance to sit down and have lunch with them you know the two questions that come up is would we want to do that and secondly what might you be willing to pay for that right and so we had a situation where I think Warren Buffett might be similar in their class of of people, kind of the most accomplished investor ever, best investor ever, and he was alive versus all these people who are dead. And he was willing to take a bribe to have a lunch meal. And at that time, you know, in 2007 when I was bidding on the lunch, I had based my entire career on his intellectual property and learning from him from all his writings and talks and everything. And by that time in 2007, I had made more than $70 million directly from applying the principles of Warren Buffett. I felt like a tuition bill was due. And so I asked myself, what is an appropriate tuition bill to pay to a teacher who has made you $70 million richer? And I thought 3% would be pretty reasonable, might even be low. and 3% was about $2 million. So in 2007 I was bidding on that lunch and I said okay the maximum I will bid is uh $2 million and if it goes over that then such is life. I had bid for the lunch in earlier years but it always went beyond the amount I was able to bid. So I felt like 2007 was the year. And then there's a friend of mine, Guy Spear, my best friend. And I asked him if he wanted to be a co- bidder with me because you can take seven people to the lunch. And so I was going to go with my family, which was four of us, and there were still three seats left. And I asked him if he wants to come with his wife, and he could pay oneird, and we I could pay two/3s because it was two seats versus four seats. And he said he was excited to do it but he said that anything over4 million was too much for him. So I said I told guy that he would be capped at quarter million no matter what the bid ended up with. His maximum was 250,000 and above that I would cover the rest. And as it turned out, the bidding ended extremely low >> at 650,000, less than 1/3 of our budget >> and it was even below my friend Guy Spear's budget. So he paid whatever about 216 or whatever thousand and then I paid the rest. And what ended up happening afterwards is that my only agenda and interest in doing the lunch was to thank Mr. Buffett is to look him in the eye and thank him and so on. I did not expect anything more beyond that. That was the only expectation. Mr. Buffett has very different expectations from these lunches. >> What what did he offer? Yeah. What did he offer during that lunch? >> His expectation is that he wants whoever won the lunch to feel like they got a big bargain. And so even when someone is paying 26 million, his focus is on making sure that the guy who paid the$ 26 million believes after the lunch that they got a big bargain. And so when Mr. Buffett came for the lunch, his agenda was to make sure that he delivered a lot of value to us, right? And so the first thing he told us, so even before the lunch, his assistant gathered resumes and bios for all of us and he studied all of them before the lunch. So he knew everyone well. He knew everyone's background. He had studied every person who was coming. And the second is he told us when he came for the lunch that there was no time limit. He said that the lunch was starting around 1:00. He said, "I have nothing to do all afternoon." So he says, "I am here for as long as you want me to be here. When you get tired of me, you let me know and I will leave." And so he now I had another charity lunch with someone who was the CEO of Google at that time, Eric Schmidt. And that lunch was very different. Eric Schmidt's lunch took place in a cafeteria on the Google campus. >> Okay. >> And every 15 minutes he was looking at his watch. >> Okay. And that lunch was scheduled for 1 hour. And at 1 hour at 1 minute, he was gone. >> Oh. >> Okay. And so if I were to rate the two lunches, the Eric Schmidt lunch, >> two out of 10. >> Two out of 10. Okay. What about the Warren Buffett? >> I am a fair grader. It might be one out of 10. >> Okay. >> And because there's nothing I remember about it, >> right? >> There's nothing I remember which I can say, "Oh, this thing he said changed my life." For example, with Eric Smith, >> Warren Buffett, 15 out of 10. >> 15 out of 10. Wow. >> 15 out of 10. you know it went beyond 100%. Go and reason it went beyond 100% is that for a number of reasons. So during the lunch my wife was with me at the lunch and I told Mr. Buffett that she is a big fan of yours >> but the true love of her life is Charlie Mer not Warren Buffett. And Warren Buffett got very competitive. He said my partner Charlie Mer is a very boring person. He's a useless person to have lunch with. I am the one who is interesting, not Charlie. And he says, because you don't know Charlie and you think he's interesting, I'm going to set you guys up to have lunch with Charlie. And after that lunch, you will understand that I am the better lunch partner. Okay. So, I thought he was joking about all this, but then two days after the lunch, I see an email from his assistant to Charlie's assistant copying me, setting up the lunch with us and Charlie and telling Charlie in that email that this couple who also live in California, they seem to think you are more interesting than me, but we know I am. >> Let's put it to the test. >> He said, Charlie, you know that I am more interesting. So, you're going to meet them and then they will know. Okay. And when I met with Charlie for lunch, first of all, I enjoyed the lunch with Charlie much more than Warren Buffett. Okay. >> I don't think that's what he wants to hear though. >> Yeah. Well, his plan backfired. Okay. >> And the second thing that happened was that a friendship got formed with Charlie. So I met Warren Buffett for lunch in 2008. I met Charlie Mer for lunch in 2009. And after that I used to meet him probably with my family or my wife once every 3 4 months at his home for dinner and also I used to play bridge with him and his at the LA country club once every 2 3 months. So it was a very wonderful warm friendship. I also became friends with Warren. Warren the friendship was not as close as Charlie because he was in Omaha. We used to meet him less often. But basically what happened with this lunch was it was buy one lunch and get infinite lunches for free. >> Exactly. Exactly. I I mean now I understand why you called it a bargain because I mean so much >> buy one and get 100 for free. >> It's a good bargain. It's a great bargain. >> Yeah. And the other thing is that so many great things happened in my life >> because of the lunch. And like I told you before, my agenda was none of these things. My agenda was just to spend the 2 million to pay the tuition bill, thank my hero, >> right? >> And that was it. Okay. >> And after that lunch, every year I go to Burkshire Hathaway for the Burkshshire Hathway annual meeting. I've been going >> for 30 years now. Okay. >> Right. And after we won the lunch, so Warren Buffett has private brunch on Sunday with his close friends and his board of directors, senior managers, etc. >> And he would invite Guy Spear and me for that brunch on Sunday every year. And when Guy and I used to go for that brunch, >> I felt like we were the only two yo-yos in the room because I used to tell Guy, don't look behind us because Bono is talking to Bill Gates. Okay. So, they would be NFL players in that room. >> Right. Right. >> There used to be Hollywood actors in that room. >> There were so many politicians in that room. Only people who were known was me and Guy Spear. We were the only two unknowns and every year I said they're going to figure out next year that we don't belong here and the invite is not going to come. But every year we keep getting this invite. So the thing is the lunch was buy one get infinite free. All these amazing things happened. >> I mean you did say that it was one of the best deals that you made but let's talk about some of the other deals that you made because you have such good insight with the market. um you did comment once that Korea was trading uh with this persistent discount. So how would you describe the Korean stock market now? >> So I have to say I have been blessed to have made many trips to Korea in my life and I consider Korea to be one of the most advanced civilizations. It's just an extremely highly evolved civilization. I always enjoy my time there. And one of the things that I'm distressed about nowadays is that the population of South Korea is going down. And it is going down at a very rapid rate. It's going down at a faster rate than even Japan. So please produce more babies. My appeal to the married men and women, the young married men and women of Korea is to please produce more babies. And for the young women and men who are thinking of getting married, please get married soon, right? And please produce a lot of smart Korean kids. So, >> do you think that would affect the stock market in any way? Because I mean with what what what with with what's what's happening with the Korean >> in the long run any civilization which has a declining population is going to have a challenge with the total output of the country and that will get reflected eventually in the stock market. So if we take a country like Korea or if we take a country like Japan with a declining population, the only way that GDP can grow in some decent way is by being an export powerhouse. Korea is an export powerhouse. But but then you start getting into issues like what we have. There are two issues for example that that start happening. One is countries like the US start reacting with tariffs and so on which is a negative. The second is that because of the declining population, the labor costs are going up spectacularly. >> So for example, for Hyundai, it's cheaper to produce a car in Alabama than it is to produce it in Korea. And so the production is going to get moved to China and India and Alabama and so on, which has already happened. So that is a negative from the Korean point of view. And so there are many reasons why we want at least a stable population if not a singing one but ideally Korea would have an increasing population. The second thing I would say about the Korean market currently, Korean market currently, and I'm not an expert, you know, I'm an outsider looking in and currently I don't have any investments in Korea, but the Korean market currently is very lopsided because of what is happening with SKH Highix and Samsung, >> right? The semiconductor industry is really, you know, >> Yeah. And the thing is so the good news is that there is a massive tailwind which Korea is a South Korea is a beneficiary of because they are providing the pickaxes in a gold rush. I have visited with SKH highinex and I have visited with Samsung many times and I used to have an investment in Micron and also in SKH highinex and it's very unfortunate that I violated my own rule and I sold these companies when they should have been kept forever but these businesses SKH highinex and Samsung and Micron the memory business is a very protected business it is almost impossible for a fourth new player to come into this business. When I was interacting with the senior management of Micron few years back, they told me that if one of our fabs burnt down, you know, got destroyed >> and we have all the patents and we have all the engineers and we have everybody who built that fab >> and we try to rebuild the fab again. He said that we are not sure if we can rebuild it with the same production and cost as before because he says that there's an aspect of manufacturing memory chips >> that is black magic. And so when you have a fab running you know it's running because of some known things and some unknown things. And when you start messing with those things it can become difficult. And so for a new entrant to come in, first of all, they would have to violate a lot of patents, >> right? >> Secondly, they would have to secure a lot of senior engineers and managers and so on. Very difficult. And thirdly, it would take them 10, 15, 20 years to do it. So these three companies are not able to keep up with the demand right now. So if you have a Samsung mobile phone or an iPhone, the price of that is already gone up because the memory price has gone up and the next generation become in all the electronic prices are going up because the memory prices are going up and the chips are on allocation. So when you look at a country like Korea, the indices are dominated by these two companies. They make up a large portion of the Cosby index >> and so it has been a wonderful ride for investors. So I would just say the following that if you already own it, don't sell it. But if you don't own it, don't buy it. >> So now is not the time to buy. >> Just hold what you have. Don't sell what you have for a while. The party has only just started. >> So do you think the Cosby would continue to rally? Well, I'm not as familiar with the rest of the Cosby and the rest of the Cosby, my feeling is still be somewhat undervalued. But the headwind the Cosby faces is the population decline. So if you look at companies in Korea which do not have an export bias, those companies face real challenges. The ones that do have an export bias, they have some tailwind but they're also it depends on what's going on. Like I would say that even the Hyundai of the world which are fabulous businesses >> have challenges because of that. >> Okay. So I guess it's a little bit related to that question. Um looking back at all of your investments, what specific checklist items has saved you the most money and how should um you know retail investors like us, like me incorporate that when we're evaluating a a stock or a company? >> Yeah. So my checklist, just to give you a little bit of background, my checklist came from the aviation industry. In fact, all checklists that are in use today have their origins in the aircraft and aviation industry. So in the US, the regulator of commercial airlines and airplanes, FAA, Federal Aviation Authority, anytime there's a plane crash, they send a lot of investigators, >> find out why the plane crashed, okay? And they spend an inordinate amount of effort to get to exactly why a plane crash happened. After they find out why the plane crashed, if it has something to do with some aspect of the design or the engineering of the airplane, they are going to look at things very pragmatically. So they're going to say, "Okay, let's say we make no changes in the next 10 years or in the next 20 years, if we make no changes, how many humans would die?" Okay, they would try to make an estimate of how many humans would how many crashes would take place and how many humans would die. The FAA has a definition of what a human life is worth. According to the FAA, it's not infinite. They have a specific number and that number goes up in inflation. I think the current number is around $5 million. Let's say for example, some airplane crashes and they find that if this issue is not fixed over every 10 years, 500 people will die for example. So they will take the number 500 multiply by 5 million and that's $2.5 billion. So whatever fix they are going to tell the airline industry to make has to cost less than 2.5 billion. If the fix is going to cost 20 billion for example they will not do the fix and because the FAA takes a pragmatic approach to how it does this two things have happened with aviation. Number one, aviation is very safe. And number two, flying is very cheap. >> Okay? If the FAA took an approach which said a human life is worth infinite, it would cost4 million dollars to fly from LA to Seoul. Okay. That's what the >> We don't want that. No. >> Exactly. So they have taken a middle ground and they only make changes, the only changes that ever get made in aviation for safety is after a plane crash. They never sit in a lab and say let's make this change or that change to make things safer. They only do it after a plane crash. Okay. So I said let's apply aviation to investing. What is the equivalent of a plane crash in investing? A stock where you lost money >> or a stock which went to zero. That's a crash with no survivors. A stock that went to zero. Okay. And a stock that went down you sold at a loss. That's a crash with some survivors. So I said what we are going to do is we're going to only make changes to my investment approach based on crashes because who am I to do something more advanced than the FAA? The FAA has solved this problem. So I said okay let's go look at the great investors of the world and let's look at the mistakes they made which is companies they invested in where they lost money >> and let's see if it was visible before they lost the money that they were going to lose the money in other words >> so are you looking for like signs >> yeah so what I'm trying to say is that what I'm trying to understand is before a plane takes off can we tell that it's going to crash or not and so to give you an example Example, Warren Buffett. He's an open book, so I could look at all his mistakes. >> He made an investment a few decades back in a shoe company called Dexter Shoes. Dexter shoes made shoes in the United States. And Warren Buffett gave them 2% of Berkshire stock to buy that company. Now, what happened almost immediately after he bought the company is the shoe business faced lots of foreign competition from China, Vietnam, etc. and their cost of manufacturing in the US was too high. And what ended up happening is Dexter shoes went out of business. That was a crash with no survivors. So the question I asked myself was, is this a business that can be negatively affected by cheap foreign labor or cheap foreign competition? So when I'm looking at a company, I have this question. Let's say I'm looking at a bank in the US. Okay? Now, a bank in the US is not going to be affected by foreign labor. The question doesn't apply. But if I'm looking at a bicycle manufacturer in the US, >> that could get affected. All the bicycles in the world are made in Taiwan. All the brands, all the bicycles except like Shimano in Japan, which makes great parts. They do well. So what I'm saying is, so that would say that if I'm looking as a bicycle manufacturer in the US, the checklist is said Monish, don't go there. You can see what happened to Dexter. I made a checklist based on the crashes only. And I started making this checklist 16 or 17 years ago. It used to have 70 or 80 questions. Now it has 213 questions. And it doesn't take very long. Usually the first time I run a checklist, I cannot answer a bunch of questions. Which means I have not done the work. Let's go figure out how to answer those questions. Then we come back and then we find all the questions where there's a failure. And then we look at those failures and say based on these failures, do we want to take off or not? We can make that decision. And so the checklist is fantastic. And >> so do you do this every time you're looking at a new company? You do all 23. >> Absolutely. Absolutely. We do not take off. A pilot a pilot does not take off before running the pre-investment checklist. >> Right. Right. >> Do you remember Peanut Girl? >> The peanut girl. >> You know Peanut Girl in Korea? >> What is the peanut girl? No. Oh, Peanut Girl is the lady who was the daughter of the founder of was it Korean Air or Asiana Airlines? Korean Air I think. >> Oh. Oh, I think the precise nut was Macadmia. But Peanut >> Macadamia. Okay. Okay. Anyway, I know her as Peanut Girl. Now, when that plane was about to take off, she was unhappy with the way the nuts were served. >> Okay. And she forced the aircraft to come back to the gate. and she was not very polite to the stewardist there. >> That was not part of the pre-investment checklist. Okay. She introduced an extra item, the pre-investment checklist that was not required. And unfortunately after that peanut girl who I think was very smart and should have been the successor to that business was taken out and not given any chance to succeed her father. So anyway, pilot is not going to take off before running the pre-investment checklist and we are not going to buy a stock till we have run the pre-investment checklist because the checklist doesn't take much time. Even though it's 213 questions, once we've done the work, it may take less than one or two hours to run it. We only have two or three investments I make in a year. I have so much time. All I have is time. So I >> And you go through the checklist. >> Yes, absolutely. We go to the checklist. We look at what the failures are. Now the for an individual investor because I have not published my checklist it is proprietary but for an individual investor when they are about to invest there are three important things that are important checklist items that they should look at. The number one reason why investor lose money in investments is because of leverage. So the company has too much debt or the investors themselves are using debt to buy stock. Okay. So the most important thing when you're trying to make an investment is try to make investments in companies that have no leverage, zero leverage. And also do not yourself borrow any money to buy stocks. So are you familiar with a company called IKEA? >> Of course. >> All right. The founder of IKEA who passed away a few years back. IKEA is a private company, never went public. It's privately held. In his whole life of building IKEA, he ran IKEA for more than 70 years. He did not borrow even one Korean war or even one euro. He did not want to borrow money at all. And IKEA never went public to raise money in the public markets either. >> Every single store was opened out of the retained earnings of the previous stores. And the reason he did that is for Ingmar who was the founder. He wanted IKEA to last for 500 years. He wanted it to last for a thousand years. And so he built the company with principles which will allow it to last for a thousand years. And one of those principles was we are never going to owe anyone any money. Because if we don't owe anyone any money, no one can come and stop us from playing our game. It's a very important thing for investors to not borrow money and not invest in companies. So the best companies in the world do not need debt to grow. They can grow without debt because their business is so good. Okay. >> The second reason why investments don't do well is investors misunderstand the competitive advantage or the moat of the company. What Buffett calls the moat. What is the competitive advantage of the company? Now for a long time the memory business was a useless business. There used to be 20 different memory companies. They were fighting each other and cutting the price and trying to get higher capacity. And in the end, no one would make any money. And eventually they went out of business or they got bought out. And we end up with three memory companies, Samsung, SKH Highix and Micro. And it went from not a good business to a very good business. and the mode became much better because now they have all the patents and because the density of the chips is so high it's very different difficult for a new entrant to come in the the processes are so complicated opening a new fab is so complicated so the second is we want a very strong moat now let's say for example I look at a company like amore pacific okay you may be a customer of amore pacific I don't know are you a customer of amore pacific >> can't say that I am. >> Oh, can't. So, women all over the world want their skins to be like Korean women's skin. >> Oh, you're talking about Amora Pacific. >> Amora Pacific. >> Oh, definitely. Definitely. >> Are you a customer? >> Oh, very loyal. >> All right. Very loyal. There you go. Okay. Now, the thing is women all over the world >> Mhm. >> want their skin to be like Korean women. They are envious of the skin of Korean women and the best skin care companies in the world are in Korea in South Korea, right? But I think that that's a business even though Amore Pacific has done extremely well >> that is a difficult business >> because the boat is a little bit shallow. I would >> the issue is that there are so many companies trying to attack that market, >> right? And women are constantly seeking even better treatments. >> They are never satisfied with what they have. They want even more, even better, even younger. You know, they want all these things. It is possible that a company like Amore Pacific may do well for a while, but they constantly face pressure. So sometimes a business like that and especially a business which doesn't have a brand but which has a great product may not make it because the market is so difficult or let's say if you look at a a restaurant in Korea that'd be a terrible business >> you know because the business or some hotel in Korea may not be a good business. So the second is try to understand the durability of the business and the durability of the port of the business. So no leverage, high durability >> and the third most important thing is the quality and ethics of the managers and the owners of the business. >> So governance in in one word >> the governance. Yeah, the governance and what is the quality of the people who are running the business? Do they care about the shareholders? Do they care about the employees? Do they care about the customers? Or do they care about becoming wealthy themselves? It's okay for them to like the money, but they cannot love the money. They have to love other things. They cannot love, >> right? It's more about value than profit, right? >> Do they love the money >> or do they love the business? Oh, >> okay. That's a good question to ask. >> Yeah. If a investor, forget the 213 questions. >> If the investor just focused on these three main issues, >> you know, no leverage, quality of mo, quality of the people, >> that's it. That will save you a lot of trouble. >> So if you look at the investors right um I think there are different types of investors there are those who really study the company and they really take joy in researching and investing in a good company whereas there are people who just invest in index funds. So, do you think a concentrated investment in one outstanding business can realistically outperform simply buying and holding the S&P over the long run? >> For more than 99% of investors, they should just buy the index. >> Mhm. Why is that? >> Let's say an investor wants to buy SKH Highex for example. Okay. They say, "I don't want to buy index one. I understand semiconductors. I understand AI. I think this company would do well. Right? The question I would ask them is let's say the market cap of SKH Highex, I haven't followed it lately, but let's say it's $500 billion for example. Okay. What I would ask them is what is going to be the cash flow that SKHEX will generate 10 years from now, 15 years from now, 20 years from now and how does that compare to the 500 billion. So currently SKH Highix may be making $50 billion a year for example. What are they going to be making 5 years from now? What are they going to be making 10 years from now? And if an investor cannot answer those questions with a high degree of certainty, they should not buy the stock. Okay. Now when you ask that question for some businesses, the answer can be very obvious. Yeah. >> So one should buy a business when the answer to these questions is very obvious and there's no difficulty giving that answer. >> Right? >> Okay. So for example, let's say there is a power company in Korea, okay, supplying power to the homes of millions of customers. And let's say that power company makes $und00 million a year in earnings. Okay. Now people cannot change their power company every year. Okay? It's a regulated business. Usually only have one company that provides you power and so on. And the regulator allows the power company to make a certain return and charge a certain price and all of that. So it's a very well understood well regulated business. Okay. Let's say the power company is making 100 million a year and you can buy the whole company for 300 million. Okay. Which means that if you hold that company for 3 years and they are issuing dividends of 100% of their earnings, you get all your money back, right? In 3 years, you get all your money back. >> You still own the power company and it's going to keep giving you dividends for 50 more years, >> right? >> Maybe 100 more years. So >> that has become a no-brainer riskfree investment, >> right? >> Okay. Those are the only investments we are interested in risk-free. So usually the risk-free investments are in sectors that are hated and unloved. >> Hated and unloved. >> Un hated and unloved. If something is loved, please don't buy it. And so what we are looking for in investing, we are looking for anomalies. We are looking for anomalies. We're looking for things that don't make sense. M >> a power company should not be available for three times earning but in Korea in the past if you go back and look there were many power companies available for less than five times earnings some even at three times earnings right >> because people don't care about power too boring they're looking for excitement now in my case 70% of my portfolio is in Turkey I am not Turkish even though I have a great mustache better than most Turks have I am from India. I am originally from India. I'm not from Turkey. I have 264,000 followers on X. >> Out of them, 50,000 are in Turkey. >> And they keep talking about me in Turkish. So I have to keep hitting translate to see what they are saying about me. >> Okay. >> What are they saying about you? Things >> mostly good things. They usually just follow whatever I'm investing in. But anyway, the reason I got interested in Turkey and I started investing in it seven years ago >> was because it was screening as the cheapest market in the world. >> Right? So I had a friend I have a very close friend in Turkey who's a he's the second largest fund manager in Turkey and I told him about 8 years ago I said hi there I would like to visit Istanbul and if you don't mind I would like to visit the companies in your portfolio and I was just going to do this to educate myself. I did not plan to make any investments. I just thought Istanbul is a place with some great food. >> It's got some great architecture, great history. >> What's wrong with visiting Istanbul? No problem. Okay. >> But then you ended up investing in in did you invest in a lot of the companies that you visited? >> We have we have like three or four investments in Turkey. But the >> Okay. >> But the second year when I went when whenever we were driving to a company that's when I started to ask him questions about the company because I didn't want to do any work till after I met them. >> So he told me about this company where he said Monish the market cap you can buy the whole company was $16 million16. >> Okay. and the liquidation value of the company is $800 million. Okay, you could buy the company for 2% of the liquidation value. >> It's like being able to buy a million dollar apartment for 20,000. >> Okay, so I asked him, "What do they do? Why are they so cheap?" He said, "Everything in Turkey is cheap." And I said, "What do they do?" So he said, "They rent warehouses." So this company was the largest builder and renter of warehouses in Turkey. They they have 12 million square ft about 1.2 million square meters of warehouses and their clients are Amazon, IKEA, Car, Mercedes, Toyota, you know, all these IKEA and so on and 99% leased inflation index leases, you know, just collecting rent. So in Turkey when I went and looked at the market it was super cheap. So many things were trading at P of 1 P of two I started buying this company Rayas this warehouse company after I looked at it ran the checklist and all that and now we own 40% of the company. >> Oh wow. >> Because it was so cheap I and the market cap used to be $15 million. >> It is now $1.5 billion. Okay. It has been seven years. >> In seven years, we have done nothing. We just hold the company. Okay. >> So, you just hold on to the good ones. Never let >> hold on. And the thing is the liquidation value used to be 800 million. Now, it is 2 and a.5 billion. So, it's actually moved up a lot more. And what I realized which I didn't know at that time were the company is really good at building value. They're very good operators. Very good. The father and son who founded this company, the son is only 41 years old. If they run the company for 30 more years or 40 more years, >> I will own it for as long as they run it. >> Right. Right. >> Okay. We're not going to sell it. We're just going to own it forever. That's what we want to do. We want to look at things that make no sense. When you tell me I can buy a home worth $1 million for $20,000, I'm going to buy that home. >> Right. That makes sense. That makes sense. >> And then that home someday may be worth $3 million. And that's fine. Mhm. >> So >> if you say every day that I'm not going to do anything, I'm just going to look at what is happening. Once every 6 months, 1 year, 2 years, you find something unusual that doesn't make sense. That's when you step in. >> Right. So you did talk a little bit about your investment strategy, the Dondo method. Related to that, what would be your idea of heads I win, tails, I don't lose much investment opportunity in this age of AI? >> Yeah. So the heads I wins tails I don't lose much is a very very important framework for investors to have. The most important thing to consider before making an investment is how can I lose money? How can this investment result in me having a loss? >> And really the answer should be it can't. >> It can't. >> It cannot. So going back to the company in Turkey, >> it has no debt. >> It's got 1.2 million square ft of prime warehouses in these prime locations rented by Fortune 500 companies. If they don't pay the rent, they will get evicted. >> Okay? If they want to empty the warehouse and give the warehouse back, it'll take them two years to empty the warehouse. They can't find another warehouse because warehouse is 100% leased. So I tried again and again to find so how could the company go away there could be a big earthquake >> right >> there could be a big earthquake it could destroy the warehouses and maybe they don't have insurance >> okay so if there's a big earthquake the warehouse is destroyed and there's no insurance we have lost money right so I checked do they have earthquake insurance and I also checked can they survive an 8.0 earthquake in their construction standards. I looked into that. Turkey had earthquakes in Istanbul where their warehouses are >> after I invested. >> Not a single warehouse had even $10 of damage. >> Okay. >> After the earthquake, >> right? >> Well done, Monish. Well done. >> Pat on the back. Pat on the back. >> Right. So, how how do we apply this though in in like the AI sector, let's say? So the way we apply it in the AI sector is we're not going to go there. I already told you hated and unloved. >> Hated and unloved. Okay. >> It cannot go to things that are loved. >> AI is very deeply loved. You know what used to be deeply loved? What used to be deeply loved was Bitcoin. >> Bitcoin, right? >> Bitcoin used to be deeply loved. And then when AI came, there was the next shiny object. So all those people who had Bitcoin, they dumped all their Bitcoin and they bought the AI >> and Bitcoin went from 100,000 to 70,000. And Bitcoin is not supposed to go down. It's like gold. >> Gold went up, but Bitcoin went down. So what I'm saying is now the people who own AI, they are going to be selling AI very soon and they're going to buy the next shiny object. Do you know what the next shiny object they're going to buy? The next shiny object they're going to buy is SpaceX. >> You know the IPO of SpaceX is coming. The >> the biggest ever, right? >> And it's a very big shiny object. >> So they will sell all their AI. So, first they sold all the Bitcoin and they bought the AI. >> Now they're going to sell Skhinx and they're going to buy SpaceX. >> SpaceX. >> That's the next. >> You're saying you we shouldn't be doing that. >> Please don't buy shiny objects. >> Okay. >> Please don't buy what is loved. Please buy what is hated and unloved. >> Do your research. If you are a kind of person >> who likes to buy things that are loved, >> just buy the index. Just buy the index. But you know the sad part is >> what what's the sad part? >> The sad part is people will listen to this with they will be entertained by my mustache. >> It is a great mustache. >> Yeah. But they're going to go by SpaceX. What would you do if you had, let's say, $1,000 and you're just starting, you know, to try to create this wealth? What would you do with 10 uh $1,000? >> With $1,000, I would buy Burkshai Hathaway stock. BRKB is the ticker on the New York Stock Exchange. >> All right. Okay. We'll be sure to remember that. No leverage, lot of cash, very good management, very deep boat, very boring, very hated and unloved. >> All right. Thank you. You know, just a quick question. What is the shest way to build wealth in your opinion? Because you had so many experience in different fields like you worked at a at a tech company. It was like a high-speed internet company, right? And then you became a businessman of your own and then you're an investor. You had all these experiences. What is the shest way to build wealth? Can you break it down for us like how you would do it if you were starting over? >> You know, I'm a storyteller. >> You know, I tell beautiful stories. >> Very entertaining. >> I want to tell you a story before I answer question. >> Okay. >> Okay. In 1623, 43 years ago, the Native American Indians sold the island of Manhattan >> to the Dutch settlers who had come from the Netherlands from from uh Holland for $23. The island of Manhattan, which was all forests at that time, >> was sold to the Dutch settlers for $23. And when people hear that story, they say that the Native Americans were taken for a ride. They sold very prime land very, very cheap. There is something known as the rule of 72. And the rule of 72 is a very simple rule that helps you understand how long it takes money to double. So let's say the Native Americans had a investment officer and they went to this in investment officer and said we have $23. Please invest this money for the benefit of the tribe for the very long term. We don't need this money for hundreds of years. >> Invest the money so that it grows for the benefit of the tribe. And let's say the investment officer is not that great. He's just okay. and he can get a 7% return every year. >> Okay, that's all he can get 7% a year. Okay, now the rule of 72 is a way for us to know how long would it take money to double at a particular rate of return. If you have a 7% rate of return, you do 72 divid by 7, it's 10, the money will double every 10 years. So if that investment officer is getting a 7% return, >> in 1623 he has $23. In 1633, he's going to have $46. In 1643 he's going to have n $92 and so on. Now if you take 10 periods of 10 years each that's a 100 years >> right? >> Okay 100 years is 2 ^ of 10 10 d 2 * 2 * 2 * 2 * 2 10 times 2 ^ 10 is 1,024. Okay we throw away the 24 because the math is simpler. So after 100 years, that 7% compounding on the $23 would have grown 1,000 times. >> Mhm. >> So in 1723 it's going to be $23,000. In 1823, it's going to be $23 million. In 1923, it's going to be $23 billion. and 2023 it's going to be $23 trillion >> and then we've gone three more years after that maybe another 20% about $28 trillion is the value of that money from 1623 till now compounded >> right yes >> okay the island of Manhattan if we remove all the buildings if we remove all the buildings of Manhattan but we just look at the land prime Right? >> The entire net worth of every man, woman, and child in the United States. >> You put it all together, it's less than $200 trillion. >> 10% of that is not the island of Manhattan. The island of Manhattan is worth less than 1 trillion, maybe even like 500 billion without the buildings. So, the Indians did not get taken. They just had a bad investment officer who did not get them 7% a year. So now let's answer your question. The most important thing that an individual can do have a great investment return. There are only two things the person needs to do. >> Okay, two things. >> Number one, spend less than you earn. >> Okay, spend less than you earn. So let's say for example, every year you are saving 15% of your salary. Okay, you make $50,000 a year, you save5 or $7,000. and you're 22 years old, >> you're saving $5,000 a year. >> The second thing that you're doing is you're not going to do AI investment because it's loved, right? >> You're going to do hated and unloved. You're going to put it in Burkshire Hathaway or you're going to put it in some index. Set it and forget it. And every year, just every month, whatever you save, you keep adding to that index >> and one day you'll be 72 years old. 50 years have gone by like the Indians. Okay? Correct. >> And you keep putting and then your salary has gone up over the time. 50,000 to a quarter million because you got more experience and all that. And you know how much money you're going to have? Too much. >> Too much. Is is there such a thing? >> You won't be able too much. As much Pacific as you and your daughters and your wife want. You can buy as much as you want. >> You can buy whichever gen Genesis model you want. You can buy the best apartment in soul. You still have so much money because you only did two things. You spent less than you earned and you did something very boring. >> Okay? Do something very boring. >> Very get your excitement other places in life. Don't get your excitement from the stock market. Your listeners, >> they're going to be so disappointed because they got no exciting advice. They only got boring advice. >> But I guess 10 years from now, video >> resurfaces. Um, >> let's see. >> Let's see. >> All right. I do want to end our question uh interview with this question and it's a little bit philosophical but I do want to ask you why you still invest because once you reach a certain amount of profitability let's say I would think that it would be less about the money and more about something else so I would like to you know know what that something else what drives you as an investor is >> so each of us as as an individual between our genetics and the experiences in the first five years of our life >> we are as people is hardcoded not going to change the way I was when I was 5 years old and the way I'm going to be when I'm 95 years old is the same okay >> the essence yeah >> the cake is baked >> the cake is baked at the age of five okay >> my own peculiar personality is that I like to play games I like to play single player games. So, I'm not the kind of person who'll be happy playing soccer, being one person on a team. I'm a better guy to play bridge or chess or something, you know, single player games. So, I'm playing a game. Now, I realized that if you figure out compounding and you figure out that you spend less than you earn, that's it. You're going to make a lot of money. Now, I don't really care about the money because beyond a certain point is of no use to you. So I'm playing a game where on so first of all to play this game I have to know when I'm going to die and the good news now with AI is you can go to God Google and you can ask God Google when am I going to die and God Google told me Monish you are going to die on June 11th 204 okay and I said thank you so much God Google you made life so easy okay so June 11 204 I'm going to die okay now what I want to do one day till one day before I die which is June 10th 204 is I want to have $10,000 left. >> So I have one engine which is compounding money and I have a number another engine which is giving money away the Duana Foundation. Okay, which helps poor kids in India and so on get good education and all that. >> Both these endeavors are games for me. So one is a compounding engine, the other is a give back engine. I want the money given away to have very high returns to society and DNA generates very high returns. So as I'm compounding, I need to give away. And as these two curves over time, the giveaway needs to become more accelerated. >> And so I'm just playing games basically. So that by June 10th, 204, >> it's all gone. And if I've done that, then it's been a beautiful game. That's it. >> That's beautiful. >> So you earn more to give more, right? >> In the meanwhile, I'm hoping that I get to have a lot of Korean meals. >> >> What's your favorite Korean food? >> Korean food. >> What's your favorite? >> Well, I'm very biased towards the comfort food. >> Comfort food. >> The sundu. >> Oh, sundu is great. >> Sundu is so good. And then the pork bulgogi. >> Oh, >> with all the condiments. And you know, I'm a simple man. Just give me the bulgogi and the sundu and I'm good to go. that we put a couple of eggs into it and that's it. >> Okay, we've ran a little bit over time. Um, so sorry for that, but any last words for our viewers? >> I think this is so much fun and I think you did such a great job with the interview and I think we covered a lot of good ground. So, it was a lot of fun. Thank you so much. >> Right. Um, one last word to live by if you want to be wealthy by Monish. Let's end with that. >> Yeah. I would just close with this quote that if wealth is lost, nothing is lost. If health is lost, something is lost and if character is lost, everything is lost. >> So don't worry about the wealth. Worry a little bit about the health and worry everything about your character. >> Right. Perfect. Okay. Thank you so much for this interview. It's been so much fun and we got a lot of solid life advices. Thank you. >> Bye. See you. Bye. Bye. >>