investor center: mohnish pabrai's stock market warning: avoid these mistakes!

Everyone's chasing Nvidia. Your coworker. Your Uber driver. That guy at Thanksgiving who "got in early." But the investor who turned $1 million into $1 billion since 2000 won't touch it. Mohnish Pabrai has a one-line test that both Nvidia and Tesla fail hard. And if he's right, today's buyers might be staring at zero gains for the next decade. Let's hear why he's steering clear of the crowd favorites. Pabrai's rule is brutally simple. If you can't tell what a company will earn a decade from now, don't touch it. Investing isn't buying a flashy story. It's buying a series of future profits. If you have no clue what those profits might look like in 5, 10, 15 years, you're not investing. You're gambling. Let's quantify why Pabrai is so wary. Nvidia's stock surged over 1,000% since late 2022 and crossed a $4 trillion market cap by mid-2025. At that price, investors are betting that Nvidia's profits will skyrocket. If things dont go to plan, you may have to wait years for the business to catch up to the price you paid. Here's a simple example. Say you buy a corner bodega for $1 millionthe one on your block with the good coffee. It makes $50k a year in profit. Unless that profit grows like crazy, you could be waiting 20 years to make your money back. That's the risk with a hyped stock at a sky-high P/E ratio. You're paying champagne prices for a coffee shop. And that brings us to the key lesson. A great company can be a terrible investment if you pay too much.