Although Wall Street spent the spring chasing AI multiples and US large-cap momentum, the most instructive trade of the past decade happened nowhere near a Nasdaq screen. It happened in Istanbul, while a currency was being set on fire. The pattern that trade exposed keeps repeating, and right now it is setting up again across more than one emerging market.
Mohnish Pabrai, the value investor and longtime student of Charlie Munger and Warren Buffett, walked through the mechanics on the My First Million podcast in an episode titled “This will save you 10 years of bad investments.” The headline number is the kind that stops a scroll. Pabrai says he generated roughly 90x dollar returns investing in Turkish equities while the lira slid from roughly 5 to the dollar to roughly 45 to the dollar over seven years. The real story is about a repeatable playbook that activates every time a currency implodes.
I have been studying emerging market currency crises for about fifteen years now, and the same asset categories win every time. The headline number, the lira’s slide, the rupiah outflow, those scare foreign capital into the exits. What gets left behind is almost always mispriced.
The Warehouse Trade
Pabrai’s anchor position was a Turkish warehouse operator. Templeton Funds offered him 5% of the company for $1 million, and he accepted on the spot. He then went after the rest of the float in the open market with one of the more aggressive instructions a broker is likely to receive: “I told the broker, buy every share available. Don’t worry about the volumes. Take out all the asks.”
The thesis was almost embarrassingly simple. A warehouse is “land, paint, cement, and steel.” Every input is inflation-indexed. When the lira loses value, the replacement cost of the building rises in lockstep. Rents reprice. The equity behaves like a hard asset wearing a stock ticker. The currency collapse that terrifies foreign passive funds is the same force that compounds the warehouse owner’s dollar-equivalent net worth.
TAV Airports and the Euro Asymmetry
The second leg was even cleaner. Pabrai bought TAV Airports, a business with revenues in euros but costs in lira. As the lira fell, margins expanded automatically, with no management decision required. The valuation was the punchline. TAV traded at 3 to 4 times earnings versus 50 to 70 times for comparable airports elsewhere. You were paying single-digit multiples for an asset whose unit economics improved every time the local headline got worse.
That asymmetry is the entire game. Foreign-currency revenue, local-currency costs, compressed multiple, hard-asset moat. Whenever those four conditions stack up at the same time, the math works regardless of which country is on fire that decade.
The Mental Models
Pabrai credits four frameworks he says no one else in that market was applying: take a simple idea seriously, understand active versus passive investing, recognize inflation-proof assets, and focus on currency-irrelevant businesses. All of them demand an edge in stomach more than an edge in modeling. His oldest fund has turned every $1 into roughly $30 over 27 years, against an S&P 500 that he says turned $1 into roughly $6 or $7 over the same window.
Why The Setup Is Live Again
The lira has kept right on falling. USD/TRY closed at roughly 45.7 on May 22, 2026, drifting weaker every month from roughly 43 in early January. The US dollar’s reference rate against the lira sits at roughly 0.022 as of May 25, 2026. Turkey is not the only stressed market. Indonesia just had Jakarta-listed stocks removed from FTSE Russell and MSCI indices, triggering forced passive selling on top of a year-to-date foreign outflow of Rp 51.42 trillion and a weakening rupiah.
The macro backdrop is the accelerant. The Fed Funds upper bound sits at 3.75% as of May 24, 2026, still restrictive after cuts from a 4.50% peak in September 2025. US CPI prints at 332.4 in April 2026, up 0.6% month over month. Dollar carry remains punishing for any country running a soft currency, which is exactly the condition that strands hard-asset businesses at single-digit multiples while passive funds rebalance away.
The Playbook, Translated
The framework is portable even though a US retail investor cannot easily buy a Turkish warehouse stock directly. When a currency is collapsing, three categories tend to deliver outsized dollar returns: hard-asset businesses whose replacement cost is denominated in real things, exporters who earn hard currency while paying local-currency wages, and infrastructure operators with regulated dollar or euro tariffs.
You’d want to lean into this framework if you believe persistent inflation and dollar strength will keep pressuring emerging market currencies through the next cycle. You’d want to stay away if you believe the lira, the rupiah, and the peso are about to stabilize and reverse, because the asymmetry only pays when the herd is still selling.
Wall Street typically learns this lesson once per generation and forgets it just in time for the next currency to break. Pabrai’s Turkey trade is the worked example. The current setup, with a lira above 45, an Indonesian outflow accelerating, and US rates still restrictive, is the same pattern wearing a different flag. The pattern is in plain sight. Whether anyone applies it is the only open question.
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