In a presentation to Boston College’s Carroll School of Management last month, Pabrai Investments Funds founder Mohnish Pabrai outlines his Ten Commandments of Investment Management:

1. Thou shall not skim off the top: Investment managers should never take fees off the top, Pabrai argues, echoing the shared view of Warren Buffett and Charlie Munger.
2. Thou shall not have an investment team: Investment analysis, which Pabrai describes as “the fun part of the job” is best done by one person. Any two humans, he asserts, “will have differing circles of competence.”
3. Thou shall accept that thou shall be wrong at least 1/3 of the time: The investment process, says Pabrai, is one in which “we are trying to extrapolate the future of businesses. By definition, that is a very inexact science,” he says, and an “exercise in humility.”
4. Thou shall look for hidden P/E of 1 stocks: Generally speaking, says Pabrai, “when you invest in P/E’s of 1, good things happen to you.” He cites the example of his investment in Fiat.
5. Thou shall never use Excel:  Pabrai believes in “making the math simple”, in sticking to investments that you can evaluate in your head. “Go back to the P/E of 1,” he says, “then the math is really simple. Once you start getting into high single digits or double-digit P/E’s, generally speaking, the math doesn’t work well.”
6. Thou shall always have a rope to climb out of the deepest well: The investment business, Pabrai asserts, experiences periods of both strong and weak performance, so it’s important to be able to shift your thinking to endure down periods.
7. Thou shall be singularly focused like Arjuna: Recalling the Indian epic of the great warrior and archer Arjuna, Pabrai contends that investors need to filter out the noise and stay focused on business fundamentals. “If one can get past it and just consider the nuance of the business,” he says, “things can become quite clear and quite obvious.”
8. Thou shall never short: “I will go to my grave without ever having shorted a stock, and I think you should too,” quips Pabrai.
9. Thou shall not be leveraged: Neither a lender nor a borrower be. Spend less than you earn, Pabrai advises, and put the difference into a compounding engine. “You don’t want to introduce leverage into your life.”
10. Thou shall be a shameless cloner: “Look at the highest conviction ideas of very smart people,” he says, adding, “Cloning can be very good for your health.”