Business

Investor who manages $900 million in assets says there’s one investing hack everyone should know: ‘I wish they would teach it more in high school’

Published

3 months ago

September 15, 2025

Mohnish Pabrai, a prominent value investor who manages approximately $900 million in assets through his Pabrai Investment Funds, has identified a simple mathematical concept he believes should be fundamental education for every investor: the Rule of 72.

During a recent appearance on The Diary of a CEO, a popular business podcast hosted by British entrepreneur Steven Bartlett, Pabrai emphasized the importance of this financial principle. The Rule of 72 is a simple way to help you calculate how long it takes money to double at a given interest rate.

“It’s a kind of a mathematical hack,” Pabrai said during the interview. “The rule of 72 is a very important rule, and I wish they would teach it more in high schools and elementary school.”

The formula works by dividing 72 by the expected annual return percentage. For example, at a 7% return, money doubles in approximately 10 years (72 ÷ 7 = 10.3). At 10% returns, doubling occurs in roughly seven years, while 15% returns cut the doubling time to about five years.

“It’s very important to know how long money takes to double, because then we can start doing a lot of math in our heads,” Pabrai said.

This mental calculation ability allows investors to quickly assess the long-term potential of different investment opportunities without complex financial calculators.

The power of compound interest

To illustrate the power of compound interest, Pabrai shared a compelling historical example during the interview. In 1623, Native American Indians sold Manhattan to Dutch settlers for $23. Yes, you read that right.

“If the Indians had invested at 7% a year for the last 400 years, they would have more money than owning the land,” he explained. Using the Rule of 72, that $23 would have doubled every 10.3 years at 7% returns. Over 400 years, this would have resulted in approximately $23 trillion—significantly more than the value of Manhattan real estate today, which is estimated to be in the ballpark of $2.2 trillion.

The example becomes even more striking when scaled down: “If you gave them 2.3 cents, 100 years later, they’d have $23, and now it would be the 23 trillion,” Pabrai noted, adding “if the runway is long enough, the starting capital doesn’t matter.”

Beyond the mathematical concept, Pabrai offered practical advice for everyday investors during the interview. He emphasized three fundamental principles: “spend less than you earn,” start investing young to maximize the compounding runway, and focus on broad market indices rather than individual stock picking.

“You could open an account at Fidelity or Interactive Brokers or Robin Hood, any of these places,” he said. “You could just ask them to give to buy you the S&P 500 index, for example, and they will get you invested in that.”

Pabrai said if you start investing at age 18, an initial $5,000 investment with a 10% return would result in approximately $500,000 by age 68, thanks to the money doubling seven times over the 50-year period.

“You can start seeing that over a lifetime, you’re going to be having too much money,” he noted.

The investment guru

Pabrai’s advocacy for this simple mathematical tool demonstrates how foundational financial concepts, when properly understood and applied, can transform investment outcomes. His message is clear: The path to wealth isn’t through complex strategies or market timing, but through understanding the fundamental mathematics of compound growth and having the patience to let it work over time. Plus, the simplicity of the rule—valuable for quick mental calculations—helps investors appreciate why maintaining consistent returns matters more than chasing spectacular short-term gains.

Pabrai brings considerable credibility to his investment recommendations. Born in Mumbai in 1964, he moved to the United States to attend Clemson University before launching his entrepreneurial career. After founding and successfully selling his IT consulting company TransTech for $20 million in 2000, Pabrai transitioned into investing, launching his investment funds in 1999.

Pabrai has built an impressive track record over more than two decades. His funds achieved cumulative returns of 517% net to investors versus 43% for the S&P 500 from 2000 to 2013, representing outperformance of 474 percentage points. Since inception, his funds have delivered annualized returns of approximately 25%, though recent years have shown more mixed performance relative to benchmarks.

Pabrai’s investment philosophy closely mirrors that of Warren Buffett, whom he famously paid $650,100 to have lunch with in 2007 alongside fellow investor Guy Spier.

You can watch Pabrai’s full Diary of a CEO interview below:

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.

Fortune Global Forum returns Oct. 26–27, 2025 in Riyadh. CEOs and global leaders will gather for a dynamic, invitation-only event shaping the future of business. Apply for an invitation.

Source link

Business

If the Fed cuts interest rates today it may be the last round of cheaper money until June 2026

Published

21 minutes ago

December 10, 2025

Jace Porter

Enjoy your Fed interest rate cut today—it may be the last one for a while. There is a 90% certainty that U.S. Federal Reserve Chairman Jerome Powell will announce a 0.25% cut to the base rate this afternoon, bringing it down to the 3.5% level, according to speculators on the CME FedWatch Fed funds futures index. But after that, the FedWatch index is indicating no certainty for any further cuts in 2026.

Today’s cut is priced in at level of certainty approaching 90%. But here are what the levels of certainty for keeping the rate at 3.5% look like for 2026, per FedWatch:

January: 72.2%
March: 55.8%
April: 47.6%

Only in June does a plurality—41.9%—emerge for a further cut to 3.25%.

Analysts are all over the place in their guesses about how many further rounds of cheaper money the Fed will deliver next year, and with good reason: President Trump is set to replace Powell with a new Fed chair in May.

“We see the Fed cutting rates twice in 2026, with moves in March and in June,” ING’s James Knightley et alargued earlier this month. Plus, “the potential for a more dovish FOMC tilts the risks toward additional rate cuts later in the year.”

“But does this matter, given that we know the Federal Reserve’s structure is changing?” Knightley wrote.

At Deutsche Bank, the forecast is “one further 25bp cut in each of 2026 and 2027.”

Pantheon Macroeconomics’ guess is for three cuts, “We expect 75bp of easing in 2026, but fiscal policy and FOMC personnel changes cloud the outlook.”

The presumed favorite candidate for the new Fed chair is Kevin Hassett, widely regarded as a “dove” who will follow Trump’s preference for lower rates regardless of rising inflation. But there are three others in the running: Fed governors Kevin Warsh, Christopher Waller and Michelle, Bowman, and BlackRock Chief Investment Officer of Global Fixed Income Rick Rieder.

It’s not certain if the new appointee will tip the Federal Open Markets Comittee into a more dovish position (favoring more cuts) or whether the Fed’s institutional commitment to apolitical economics will prevail, which would imply a slower schedule of cuts or perhaps—if inflation continues to rise—none at all.

ING’s Knightley noted that by the end of 2026 it is possible that “five of the seven members of the Board of Governors are Trump appointees.” The Fed is about to become much more unpredictable, in other words.

Stock markets are largely in a holding pattern today as investors wait for the rate decision. It will be Powell’s commentary— and whether he says or doesn’t say certain words—that move markets this afternoon. S&P 500 futures were flat this morning prior to the open after the index closed flat yesterday.

Here’s a snapshot of the markets ahead of the opening bell in New York this morning:

S&P 500 futures were flat this morning. The last session closed down marginally 0.09%.
STOXX Europe 600 was down 0.12% in early trading.
The U.K.’s FTSE 100 was up 0.29% in early trading.
Japan’s Nikkei 225 was down 0.1%.
China’s CSI 300 was down 0.14%.
The South Korea KOSPI was down 0.21%.
India’s NIFTY 50 was down 0.32%.
Bitcoin was at $92K.

Join us at the Fortune Workplace Innovation Summit May 19–20, 2026, in Atlanta. The next era of workplace innovation is here—and the old playbook is being rewritten. At this exclusive, high-energy event, the world’s most innovative leaders will convene to explore how AI, humanity, and strategy converge to redefine, again, the future of work. Register now.

Source link

Business

Exclusive: U.S. businesses are getting throttled by the drop in tourism from Canada: ‘I can count the number of Canadian visitors on one hand’

Published

53 minutes ago

December 10, 2025

Jace Porter

From Washington state to northern New England, American businesses that have long depended on Canadian visitors are seeing traffic dry up — and with it, a crucial source of revenue.

A new report shared exclusively with Fortune by the Joint Economic Committee (JEC) – Minority, a congressional standing committee dating back to 1946 responsible for documenting the economic conditions of the U.S., details how a sharp drop in Canadian tourism is hitting every U.S. state along the northern border. The findings come as President Trump has proposed annexing Canada, imposed several rounds of tariffs on Canadian goods, and repeatedly broken off trade talks with Ottawa, contributing to a chill in cross-border travel and spending.

From January to October 2025, the number of passenger vehicles crossing the U.S.-Canada border fell by nearly 20% compared with the same period in 2024, according to the JEC analysis, which draws on U.S. Customs and Border Protection travel statistics. In some border states, the decline reached 27%, a shift that local tourism agencies say is showing up in fewer tourists, more hotel vacancies, and weaker sales.

“Going back for generations, Canadians have visited New Hampshire and many other states along the U.S.-Canada border to see family or friends, stay in our hotels, share a meal at our restaurants, and shop at our stores,” said U.S. Senator Maggie Hassan (D-NH), Ranking Member of the Joint Economic Committee. “However, in the wake of President Trump’s reckless tariffs and needless provocations, fewer and fewer Canadians are making trips to the United States, putting many American businesses in jeopardy and straining the close ties that bind our two nations.”

Canadians have historically been among the most important international visitors to the U.S., both in sheer numbers and in spending. Analysts and tourism officials note that rising prices, a weaker Canadian dollar, and heightened political tensions have nudged many travelers to choose domestic trips within Canada or alternative international destinations instead. For U.S. border communities, that shift is being felt in real time.

“These are more than numbers; they represent missed revenue for local businesses, reduced hotel demand, and fewer dollars supporting jobs and investment in our community,” said Shirley Hughes, president and CEO of Visit Fargo-Moorhead in Fargo, North Dakota, and Moorhead, Minnesota.

In northern New Hampshire, the absence of Canadian license plates is especially stark. “Being only eight miles from the border, normally Canadians make up anywhere from 15-25% of visitors. Now, I can probably count the number of Canadian visitors on one hand. I’m just trying to plug along and keep my nose above the waterline,” said Elizabeth Guerin, owner of the Fiddleheads gift shop in Colebrook, New Hampshire.

The impact stretches beyond retail and lodging into wineries and attractions that rely on cross-border regulars.

“The drop in visits from Canadian tourists has had a noticeable impact on our bottom line. With Canadians making up about 10% of our business, fewer cross-border travelers mean fewer tastings, tours, and wine sales — a ripple effect that touches our entire operation, underscoring how important cross-border tourism is to our business model,” said Scott Osborn, president and co-owner of Fox Run Vineyards in Penn Yan, New York.

Some operators worry the damage will outlast any eventual thaw in U.S.–Canada trade relations, as Canadian travelers form new habits elsewhere.

“This is long-lasting damage to a relationship and emotional damage takes time to heal. While people aren’t visiting Vermont, they’ll be finding new places to visit, making new memories, building new family traditions, and we will not recapture all of that,” said Christa Bowdish, owner of the Old Stagecoach Inn in Waterbury, Vermont.

On the West Coast, festival organizers are also feeling the pinch.

“Since March of this year, we have not only seen Canadian traffic drop drastically, but we have also seen a drop in our number of attendees at our festival this year in late September. We knew that after March, we could not rely on our Canadian business because of fear at the border and lack of understanding of what is happening with tariffs and Canada drawing a strong line of promoting Canada first,” said Kevin Coleman, executive director of SeaFeast in Bellingham, Washington.

For businesses up and down the northern border, the question now is not just when Canadians will return in force, but how much of that lost business can ever be won back.

For this story, Fortune journalists used generative AI as a research tool. An editor verified the accuracy of the information before publishing.

Source link

Business

Activist investors are targeting female CEOs—and it’s costing Corporate America

Published

1 hour ago

December 10, 2025

Jace Porter

Good morning. When Victoria’s Secret reported stellar quarterly results last week, shares shot up 14% and likely gave Hillary Super some breathing room from the activist investors pushing the lingerie company to, among other things, consider whether the CEO of 16 months is up to the task of turning it around.

Of course, the potential of having to deal with an activist investor’s campaign goes with the territory of being a CEO, especially at a company that has been struggling. But Super’s saga is a reminder that women CEOs remain much likelier than their male counterparts to be targeted by activist investors.

This year, according to a report last week by the Conference Board, women have made up 8% of the CEOs in the Russell 3000 index but accounted for 15% of activist campaigns specifically targeting chief executives. Other women to have recently confronted activists: Cracker Barrel’s Julie Masino, who survived a campaign, and Vail Resorts’ Kirsten Lynch, who did not.

What makes the Conference Board report especially frustrating is that it adds more proof points to an old, seemingly intractable trend.

In 2015, the New York Times’ DealBook pondered “Do Activist Investors Target Female CEOs?” while Fortune’s Pattie Sellers asked “Does Nelson Peltz have a problem with women?” In 2017, Harvard Law School found that women CEOs had almost a 50% higher probability than men of becoming the target of shareholder activism.

Why? One reason, the Conference Board theorized, is rooted in a stereotype that women are more cooperative. It’s also conceivable that the trend reflects the glass cliff phenomenon in which women often take the helm of companies in decline. But there is almost certainly some bias at play. The Conference Board research showed that women targeted by activists face the same odds of being canned whether they turn things around or not, while male CEOs are less likely to be ousted when results improve.

Some of the most prominent women chief executives ever have tangled with activists: PepsiCo’s ex-CEO Indra Nooyi, ex-Yahoo CEO Marissa Mayer, ex-DuPont CEO Ellen Kullman, ex-Mondelez CEO Irene Rosenfeld, ex-HP CEO Meg Whitman, and Mary Barra, still at GM. Michelle Gass, now thriving as CEO of Levi Strauss & Co, dealt with not one but three activist campaigns as she tried to fix Kohl’s.

Everyone should be held accountable when their company is failing or on a bad path. But it is worth wondering what this extra hurdle women CEOs face is costing us. Activist campaigns are bruising to the company but also to a CEO’s reputation. Does this mean boards might be more likely to avoid naming a woman to lower the odds of an activist campaign, or that fewer women will throw their hat in the ring?

Either way, it seems the phenomenon could needlessly be costing corporate America some much needed talent.—Phil Wahba

Contact CEO Daily via Diane Brady at diane.brady@fortune.com

Top news

Fed watch

All eyes will be on the Fed meeting today even though an interest rate cut is all but certain. Instead, investors will focus on Chair Jerome Powell’s tone and whether he characterizes Fed policy as “in a good place;” doing so would imply that a January cut is unlikely.

Fed chair watch

Meanwhile, President Donald Trump has narrowed down the candidates to replace Powell as Fed chair. The frontrunner is National Economic Council Director Kevin Hassett, but to clinch the job he’ll reportedly have to outshine three other contenders in the final round of interviews, suggesting he’s not a shoo-in for the job.

Trump’s affordability tour

In his first in a series of speeches about “affordability,” President Trump mocked the term and insisted that Americans are doing better than ever. In reality, U.S. inflation is close to 3%, about where it was when Trump’s predecessor Joe Biden left office.

Miami’s mayoral race

As Trump railed against affordability, Eileen Higgins, a Democrat, defeated Trump’s favored candidate in Miami’s mayoral race with a campaign focused in part on affordable housing. She’s the first Democrat to occupy Miami’s City Hall in three decades (and the first-ever woman), giving Democrats another jolt of momentum ahead of the 2026 midterms.

Taiwan’s chip action

Taiwan is invoking a national security law to protect the trade secrets of its homegrown chipmaker TSMC and has used it to indict a TSMC supplier for allegedly letting a former employee steal details about TSMC’s top chips.

Layoffs hit 1.1 million

Recruitment firm Challenger, Gray & Christmas has calculated the number of layoffs so far this year at 1.1 million, the sixth time since 1993 that layoffs have been that high. Technology was the hardest hit sector with 150,000 layoffs.

Americans ‘living on the financial edge’

Moody’s Analytics Chief Economist Mark Zandi told Fortunethat many Americans are “already living on the financial edge,” and that a drop in their spending could lead to a recession. If layoffs increase, then Zandi estimates that a “jobs recession” is certain.

Sam Altman worries about ‘rate of change’

During an appearance on The Tonight Show with Jimmy Fallon, OpenAI CEO Sam Altman admitted that he’s worried about “the rate of change that’s happening in the world right now.” He added that the “rate at which jobs will change over may be pretty fast,” with hopes that “much better jobs” will follow.

The markets

S&P 500 futures were up 0.05% this morning. The last session closed down 0.09%. STOXX Europe 600 was down 0.19% in early trading. The U.K.’s FTSE 100 was up 0.14% in early trading. Japan’s Nikkei 225 was down 0.1%. China’s CSI 300 was down 0.14%. The South Korea KOSPI was down 0.21%. India’s NIFTY 50 is down 0.32%. Bitcoin is up at $93K.