Author Topic: Mohnish Pabrai blog  (Read 96568 times)

randomep

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Re: Mohnish Pabrai blog
« Reply #240 on: January 12, 2019, 11:02:41 AM »

Does anybody have updated Pabrai funds results for 2018?

thanks


Tim Eriksen

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Re: Mohnish Pabrai blog
« Reply #241 on: January 12, 2019, 11:46:11 AM »

Does anybody have updated Pabrai funds results for 2018?

thanks

I don't think they are out yet.  The nine month results someone passed on to me were not good.  PIF2 -26.4%, PIF 3 -32.8% and PIF4 -10.5%.  Rain Industries continued to fall in Q4 from 166 to 134.  It is currently at 116.75. 

randomep

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Re: Mohnish Pabrai blog
« Reply #242 on: January 14, 2019, 09:08:01 AM »

Does anybody have updated Pabrai funds results for 2018?

thanks

I don't think they are out yet.  The nine month results someone passed on to me were not good.  PIF2 -26.4%, PIF 3 -32.8% and PIF4 -10.5%.  Rain Industries continued to fall in Q4 from 166 to 134.  It is currently at 116.75.

Well can you (or anyone else) please post them results as soon as them become available?

I am investigating whether this and other hedge funds are magnifying returns both on the upside and downside. So far it seems to be so for Pabrai's funds.


investmd

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Re: Mohnish Pabrai blog
« Reply #243 on: January 14, 2019, 08:36:56 PM »
Randomep, I'm not clear what you mean by "magnifying results" ? Are you concerned that results are falsified? both on upside and downside? To what purpose? Surely, you don't mean to cheat investors?
Jehangir



Does anybody have updated Pabrai funds results for 2018?

thanks

I don't think they are out yet.  The nine month results someone passed on to me were not good.  PIF2 -26.4%, PIF 3 -32.8% and PIF4 -10.5%.  Rain Industries continued to fall in Q4 from 166 to 134.  It is currently at 116.75.

Well can you (or anyone else) please post them results as soon as them become available?

I am investigating whether this and other hedge funds are magnifying returns both on the upside and downside. So far it seems to be so for Pabrai's funds.

SHDL

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Re: Mohnish Pabrai blog
« Reply #244 on: January 14, 2019, 09:03:29 PM »
I think what randomep means is "high beta" (to use the technical term).  The idea is, if, for example, the market does +10%, -5%, +3%, +4% over 4 years and you do +30%, -15%, +9%, +12% then your portfolio has a beta of 3 which is considered "high" - your portfolio is basically "amplifying" the market's return by a factor of 3 both on the upside and on the downside.

Finance academics used to (I donít know if they still do) teach this notion that such portfolios arenít adding any value because theyíre just taking more risk. Thatís ridiculous IMO but anyway.
« Last Edit: January 15, 2019, 01:35:07 PM by SHDL »

randomep

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Re: Mohnish Pabrai blog
« Reply #245 on: January 16, 2019, 07:05:26 AM »

Finance academics used to (I donít know if they still do) teach this notion that such portfolios arenít adding any value because theyíre just taking more risk. Thatís ridiculous IMO but anyway.

yaya, that's what I meant.... btw why is the above statement ridiculous

SHDL

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Re: Mohnish Pabrai blog
« Reply #246 on: January 16, 2019, 08:17:22 AM »

Finance academics used to (I donít know if they still do) teach this notion that such portfolios arenít adding any value because theyíre just taking more risk. Thatís ridiculous IMO but anyway.

yaya, that's what I meant.... btw why is the above statement ridiculous

Great. :)

As to why I don't see high beta portfolios as worthless:

Well, for one thing, if the S&P does 10% per year on average over a few decades and in the meantime I do 20% per year on average by running a high beta portfolio, Iím inclined to think that Iíve done pretty well for myself.  Yes I may have experienced greater volatility in the interim but so what?  This is my portfolio and I donít see volatility as a problem, in fact I actually like it because it creates nice opportunities to add more funds to the portfolio from time to time. 

Also, another way of looking at this is, letís say I want to construct a portfolio with beta=2 from scratch.  Can I do it for free?  Of course not.  Sure, I could buy the SPY with leverage but leverage costs money ó especially if I want to make it non-recourse.  Not to mention the huge blow up risk Iíd be taking by doing so. 

Jurgis

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Re: Mohnish Pabrai blog
« Reply #247 on: January 16, 2019, 08:34:57 AM »

Finance academics used to (I donít know if they still do) teach this notion that such portfolios arenít adding any value because theyíre just taking more risk. Thatís ridiculous IMO but anyway.

yaya, that's what I meant.... btw why is the above statement ridiculous

Great. :)

As to why I don't see high beta portfolios as worthless:

Well, for one thing, if the S&P does 10% per year on average over a few decades and in the meantime I do 20% per year on average by running a high beta portfolio, Iím inclined to think that Iíve done pretty well for myself.  Yes I may have experienced greater volatility in the interim but so what?  This is my portfolio and I donít see volatility as a problem, in fact I actually like it because it creates nice opportunities to add more funds to the portfolio from time to time. 

Also, another way of looking at this is, letís say I want to construct a portfolio with beta=2 from scratch.  Can I do it for free?  Of course not.  Sure, I could buy the SPY with leverage but leverage costs money ó especially if I want to make it non-recourse.  Not to mention the huge blow up risk Iíd be taking by doing so.

But beta by itself is worthless, yes? You want high alpha. You are fine with tolerating high beta perhaps, but saying that high beta is somehow better than low beta is also not true. You could have high beta and zero or negative alpha. And you don't want that.
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SHDL

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Re: Mohnish Pabrai blog
« Reply #248 on: January 16, 2019, 09:27:47 AM »
But beta by itself is worthless, yes? You want high alpha. You are fine with tolerating high beta perhaps, but saying that high beta is somehow better than low beta is also not true. You could have high beta and zero or negative alpha. And you don't want that.

Thereís some trickiness here. 

For example if you take the S&Pís annual excess returns over the last 5 years and just multiply them by 2, you have the excess returns of a hypothetical portfolio with alpha=0 and beta=2.  And that portfolio would have nicely outperformed the S&P despite the fact that it has no alpha.

That being said, youíre right that high beta is not always better than low beta.  Obviously you only want high beta when the market is going up.  8)
« Last Edit: January 18, 2019, 12:20:17 PM by SHDL »

Jurgis

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Re: Mohnish Pabrai blog
« Reply #249 on: January 16, 2019, 09:42:23 AM »
But beta by itself is worthless, yes? You want high alpha. You are fine with tolerating high beta perhaps, but saying that high beta is somehow better than low beta is also not true. You could have high beta and zero or negative alpha. And you don't want that.

Thereís some trickiness here. 

For example if you take the S&Pís annual returns over the last 5 years and just multiply them by 2, you have the returns of a hypothetical portfolio with alpha=0 and beta=2.  And that portfolio nicely outperformed the S&P despite the fact that it has no alpha.

That being said, youíre right that high beta is not always better than low beta.  Obviously you only want high beta when the market is going up.  8)

Ah, yes, nevermind you are right, I did not think about what you call "trickiness".  8)
"Before you can be rich, you must be poor." - Nef Anyo
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"American History X", "Milk", "The Insider", "Dirty Money", "LBJ"