Don't Copy Buffett and Munger

This article originally appeared on on Sept. 2, 2014 at 3:00 p.m. To read more content like this AND see inside Jim Cramer's multi-million dollar portfolio for FREE... Click Here NOW.

During the course of my weekend reading, I came across an interesting note from Mohnish Pabrai. It seems that he ran into Charlie Munger not long ago at an event. I have more in common with the curmudgeonly, plain-spoken, less-than-politically-correct Munger than the folksy Warren Buffett, and I am a big fan of his thought process. As someone who often thinks about the market in terms of racetracks and poker hands, how can I not admire a man who once said. "You're looking for a mispriced gamble. That's what investing is. And you have to know enough to know whether the gamble is mispriced. That's value investing."

Pabrai apparently asked Munger if he would take the "buy and hold forever" approach if he were running a smaller pool of capital. According to Pabrai, Munger said that he'd do it like he did when he ran his partnership: Buy at a discount, sell at full price and then go back. With the present situation, he said that it makes no sense to do that.

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What makes that so interesting and valuable a statement in my eyes is that it mirrors something Buffett speaking to a group of students back in 2012. He told the audience in response a question that if he were running a smaller pool of money, he would use a more Graham-type investing style with cheap stocks so he could earn a much higher rate of return. He told the kids that when you have smaller amounts of money, you can consider way more opportunities.

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