What I Learned About Investing from Darwin

by Pulak Prasad

Why were so many experienced investors blind to the problems that Munger had highlighted publicly? Why could Munger correctly predict Valeant’s demise without meeting Mike Pearson when many of Valeant’s board members and investors continued to be passionate supporters? My hypothesis is this: Mike Pearson was a fantastic salesperson. Correction. He was probably one of the best salespeople to have enamored Wall Street. The smartest people lost their sense of judgment when faced with Mike Pearson’s persuasive skills. Valeant’s honest signals of its myriad problems remained undetected or ignored in the light of the dishonest signals emitted by Mike Pearson in face-to-face meetings, which by definition were cheap to produce.