By any measure, Lauren Greenfield enjoyed a privileged background. Her parents taught at UCLA. She grew up in Venice and attended a private high school in Santa Monica. And yet she felt poor when her friends received BMWs, Porsches and Volvos for their sweet sixteens and she didn’t. “Even though I had everything I needed, I still felt like I didn’t have enough,” Greenfield says. “I still wanted more and felt less-than compared to the wealthy consumption I was seeing at school.”

That desire for more, for the trappings of affluence became an overarching theme of her career as a photographer. Greenfield has spent the past 25 years documenting people of all ages and backgrounds striving to convey great wealth. She’s recently compiled 650 images in Generation Wealth, an insightful study of materialism and vanity. “There are billionaires and white collar criminals, but a lot of the people in the work are not rich, and that’s kind of the point. It’s about the influence of affluence, and the aspiration to be wealthy. So even though some of them might look rich, they might be fighting like hell to be there.”

The book, like the ongoing project, starts in 1992 when Greenfield returned to her high school to photograph students who, yielding to the influence of media and peer pressure, were prone to excessive displays of wealth and privilege, like cosmetic surgery and riding to concerts in limos. In the years since, she’s met child beauty contestants, mingled with music producers, and visited strip clubs to see how the quest for status and wealth can warp someone’s perception of beauty and sex. She’s photographed celebrities like Kim Kardashian and white collar criminals like Jordan Belfort, whose penny-stock scam defrauded investors of $200 million and inspired the Oscar-nominated film, The Wolf of Wall Street.

Despite the thread running through her work, the idea of a book didn’t occur to Greenfield until 2012, when she was wrapping up her documentary series Queen of Versailles. The series featured David and Jackie Siegel, a Florida couple building what was at the time the biggest house in America. They nearly lost the 75,000-square-foot mansion when the market crashed in 2008, something Greenfield later saw as a morality tale about voracious consumerism. “We’d gone from this Protestant ethic of hard work and modesty and discretion and real social mobility to a culture that values bling and celebrity and narcissism at a time of little social mobility,” Greenfield says. “Bling was the new American dream.”

Greenfield and curator Trudy Wilner Stack spent four years sifting through the photographer’s archive of half a million photos and 10,000 slides. She also shot additional images during eight trips to countries like Russia and China, where westward-looking elites think nothing of decorating their homes in Versace, taking up golf and polo, and paying tens of thousands of dollars to learn how to properly pronounce the names of designer brands. “They were experiencing wealth 2.0,” Greenfield says.

The book presents a vision of wealth so opulent it’s nauseating, so gaudy it’s grotesque. Larger-than-life characters populate the pages, like “Limo Bob”, an exotic limo impresario in Chicago who wears 33 pounds of gold jewelry. A middle-class teenage boy shows off a Cartier teacup he saved and saved for. A young Walmart employee rides a glass Cinderella coach at Walt Disney World like a princess on her wedding day, pretending, if only for a day, she’s rich.

Generation Wealth will be published by Phaidon May 15.

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What You’ll Learn:

• Why managing risk matters
• The importance of patience
• How to combine risk with patience for outsized returns

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Mohnish Pabrai – Background

Pabrai worked with Tellabs between 1986–91, first in its high speed data networking group, and then in 1989, joined its international subsidiary, working in international marketing and sales.

In 1991 he started his IT consulting and systems integration company, TransTech, Inc. with about US$30,000 from his own 401K account and US$70,000 from credit card debt. He sold the company in 2000 to Kurt Salmon Associates for US$20 million. Today he is the managing partner of the Pabrai Investment Funds (a family of hedge funds inspired by Buffett Partnerships), which he founded in 1999. (Source: Wikipedia)

You will also know Pabrai as having split a $650,100 lunch bill with good friend Guy Spier.

You can read Guy’s thoughts of the lunch and what he took away.

The Dhandho Investor: The Low-Risk Value Method to High Returns

In Pabrai’s Google Talk, see video below, he talks about the investment concepts in his book The Dhandho Investor – a book highly recommended in the Old School Value’s best investment book list.

Most value investors have read it already, but for those that haven’t, the Dhandho concept of doing business centers on risk vs uncertainty, circle of competence and margin of safety.

Here’s an excerpt from Amazon.

A comprehensive value investing framework for the individual investor

In a straightforward and accessible manner, The Dhandho Investor lays out the powerful framework of value investing. Written with the intelligent individual investor in mind, this comprehensive guide distills the Dhandho capital allocation framework of the business savvy Patels from India and presents how they can be applied successfully to the stock market. The Dhandho method expands on the groundbreaking principles of value investing expounded by Benjamin Graham, Warren Buffett, and Charlie Munger. Readers will be introduced to important value investing concepts such as “Heads, I win! Tails, I don’t lose that much!,” “Few Bets, Big Bets, Infrequent Bets,” Abhimanyu’s dilemma, and a detailed treatise on using the Kelly Formula to invest in undervalued stocks. Using a light, entertaining style, Pabrai lays out the Dhandho framework in an easy-to-use format. Any investor who adopts the framework is bound to improve on results and soundly beat the markets and most professionals.

The Most Important Thing

Here are the sticking points from the video that you should take away.

“The most important thing is that, before you invest, you should be able to explain the thesis without a spreadsheet within four or five sentences. Typically I write down those sentences before I invest, so if I have a conversation with someone you could very quickly explain why this investment makes sense.” —Mohnish Pabrai, Google Talk July 21, 2014

I would add that once you have a firm understanding of the investment case, then you can dive into the numbers with stock analysis tools. Just don’t fall into the trap of making the numbers fit your thesis.

Patience is the Single Most Important Skill

“Good traits, or important traits for being a good investor, number one the single most important skill is patience. So I think the thing is that markets have kind of a way of deceiving us, because you know when you turn on CNBC and you see all those flashing red and green lights and all that, its inducing the brain to think that you need to act now, and you need to act immediately. Nothing could be further from the truth.  You know Buffett always talks about having this punch card where in a lifetime you make twenty punches, and each time you buy a stock you punch it once so in a lifetime you’d make twenty investment decisions. Which means that if you started investing at twenty and ended at eighty, every three years on average you’d make one investment. And that is very hard for most people to do. And so, the more you can slow down your investing, and the more patient you can be, so the issue is that the time scales of which companies go through change and such, is very different from the time scales of which the stock market operates. So you really have to focus not so much on the stock market and have a lot more focus on the nature of change in businesses and be willing to be in there for a while.” —Mohnish Pabrai, Google Talk July 21, 2014

Watch Mohnish Pabrai’s Talk

Play the video at 2x and you’ll be done in half the time.

Additional Reading

• Mohnish Pabrai – The Checklist Investor Crushing the Market by 1100%
• Everyone is Making Money in this Market But You
• 15 Words of Wisdom on Finding an Edge

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About the Author

The pseudonymous Hurricane Capital was Born in the 80’s, lives in Sweden with a Masters of Science in Business and Economics from Stockholm University. Got interested in value investing and devotes his free time and investing. The main goal through the Hurricane Capital blog is to learn about different investing topics, investors and business cases for investment.

This post was first published at old school value.
You can read the original blog post here Mohnish Pabrai’s Advice on How to Win without Losing Much.

First published at

Hurricane Capital

Follow me at

Hurricane Blog

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“You need a different checklist and different mental models for different companies. I can never make it eary by saying, ‘Here are three things.’ You have to derive it yourself to ingrain it in your head for the rest of your life.” —Munger

Today I finished reading the great book Poor Charlie’s Almanack – The Wit and Wisdom of Charles T. Munger.

I have read all of the talks included in the book earlier, but re-reading them is a true pleasure.

Listening to what Schopenhauer had to say about good books, I think I might pick it up again once or twice.

“Any book, which is at all important, should be reread immediately.” —Arthur Schopenhauer

In the book, Charlie talks about the importance of having different checklists and using them properly when making decisions in different situations.

This to avoid making foolish judgmental mistakes.

An Investing Principles Checklist

“No wise pilot, no matter how great his talent and experience, fails to use his checklist.”

In keeping with our intent to observe “how he seems to do it,” we will recap his approach by using the “checklist” methodology he advocates. (For Charlie’s own words of wisdom on the value and importance of checklists, see Talk Five and page 320.)

The following principles are not employed by Charlie on a one-by-one or one-time fashion as the checklist format might seem.

They can’t be easily prioritized by apparent or relative importance. Rather, each must be considered as part of the complex whole or gestalt of the investment analysis process, in much the same way that an individual tile is integral to the larger mosaic in which it appears.

Charlie Munger’s Investment Principles

1. Risk—All investment evaluations should begin by measuring risk, especially reputational

• Incorporate an appropriate margin of safety
• Avoid dealing with people of questionable character
• Insist upon proper compensation for risk assumed
• Always beware of inflation and interest rate exposures
• Avoid big mistakes; shun permanent capital loss

2. Independence—“Only in fairy tales are emperors told they are naked”

• Objectivity and rationality require independence of thought
• Remember that just because other people agree or disagree with you doesn’t make you right or wrong—the only thing that matters is the correctness of your analysis and judgment
• Mimicking the herd invites regression to the mean (merely average performance)

3. Preparation—“The only way to win is to work, work, work, work, and hope to have a few insights”

• Develop into a lifelong self-learner through voracious reading; cultivate curiosity and strive to become a little wiser every day
• More important than the will to win is the will to prepare
• Develop fluency in mental models from the major academic disciplines
• If you want to get smart, the question you have to keep asking is “why, why, why?”

4. Intellectual humility—Acknowledging what you don’t know is the dawning of wisdom

• Stay within a well-defined circle of competence
• Identify and reconcile disconfirming evidence
• Resist the craving for false precision, false certainties, etc.
• Above all, never fool yourself, and remember that you are the easiest person to fool

5. Analytic rigor—Use of the scientific method and effective checklists minimizes errors and omissions

• Determine value apart from price; progress apart from activity; wealth apart from size
• It is better to remember the obvious than to grasp the esoteric
• Be a business analyst, not a market, macroeconomic, or security analyst
• Consider totality of risk and effect; look always at potential second order and higher level impacts
• Think forwards and backwards—Invert, always invert

6. Allocation—Proper allocation of capital is an investor’s number one job

• Remember that highest and best use is always measured by the next best use (opportunity cost)
• Good ideas are rare—when the odds are greatly in your favor, bet (allocate) heavily
• Don’t “fall in love” with an investment—be situation-dependent and opportunity-driven

7. Patience—Resist the natural human bias to act

• “Compound interest is the eighth wonder of the world” (Einstein); never interrupt it unnecessarily
• Avoid unnecessary transactional taxes and frictional costs; never take action for its own sake
• Be alert for the arrival of luck
• Enjoy the process along with the proceeds, because the process is where you live

8. Decisiveness—When proper circumstances present themselves, act with decisiveness and conviction

• Be fearful when others are greedy, and greedy when others are fearful
• Opportunity doesn’t come often, so seize it when it does
• Opportunity meeting the prepared mind: that’s the game

9. Change—Live with change and accept un-removable complexity

• Recognize and adapt to the true nature of the world around you; don’t expect it to adapt to you
• Continually challenge and willingly amend your “best-loved ideas”
• Recognize reality even when you don’t like it—especially when you don’t like it

10. Focus—Keep things simple and remember what you set out to do

• Remember that reputation and integrity are your most valuable assets—and can be lost in a heartbeat
• Guard against the effects of hubris and boredom
• Don’t overlook the obvious by drowning in minutiae
• Be careful to exclude unneeded information or slop: “A small leak can sink a great ship”
• Face your big troubles; don’t sweep them under the rug

The Constant Search for Better Methods of Thought

Since humans began investing, they have been searching for a magic formula or easy recipe for instant wealth.

Charlie’s superior performance doesn’t come from a magic formula or business-school-inspired system.

It comes from his “constant search for better methods of thought,” a willingness to “prepay” through rigorous preparation, and from the extraordinary outcomes of his multidisciplinary research model.

In the the end, it comes down to Charlie’s most basic guiding principles, his fundamental philosophy of life: Preparation. Discipline. Patience. Decisiveness.

Each attribute is in turn lost without the other, but together they form the dynamic critical mass for a cascading of positive effects for which Munger is famous (the “lollapalooza” ).

Finally, a word or two on why this overview of Charlie’s investment philosophy has focused so much on the subject of “what to buy” and so little on “when to sell.” ‘the answer, in Charlie’s own words, serves as a wonderful summation of the “Munger School” of highly-concentrated, focused investing described here: 

“We’re partial to putting out large amounts of money where we won’t make another decision. If you buy something because it’s undervalued, then you have to think about selling it when it approaches your calculation if its intrinsic value. That’s hard. But, if you can buy a few, great companies, then you can sit on ass. That’s a good thing.”

Like his hero, Benjamin Franklin, Charlie Munger painstakingly developed and perfected unique approaches to personal and business endeavors.

Through these methods, and the development and maintenance of sound, lifelong habits, he has achieved extraordinary success.

To get this kind of information and other exclusive articles before regular readers, get on the VIP Mailing List today.

Additional Reading

• The Importance Of Thinking Backwards, And 5 Inverted Questions That Will Flip Your Thinking Upside Down
• Why Margin Of Safety Is Misunderstood And Not Used Enough
• 5 Successful Qualities of Buffett, Graham, Munger and How to Acquire Them

About the Author

The pseudonymous Hurricane Capital was Born in the 80’s, lives in Sweden with a Masters of Science in Business and Economics from Stockholm University. Got interested in value investing and devotes his free time and investing. The main goal through the Hurricane Capital blog is to learn about different investing topics, investors and business cases for investment.

This post was first published at old school value.
You can read the original blog post here 10 Uncanny Investment Principles by Charlie Munger.

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— Stephen King (@StephenKing) March 19, 2017