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The Dhandho Investor: The Low-Risk Value Method to High Returns Hardcover – April 6, 2007
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From the Inside Flap
All investors are told that if you want to earn high rates of returns, you must take on greater risk. Of course, the groundbreaking value investing strategies of Benjamin Graham, Warren Buffett, and Charlie Munger have shown that it is indeed possible to keep risk to a minimum while still making a reasonable profit. The Dhandho method takes their successful approach to investing one step further and shows how you can actually maximize rewards while minimizing risk.
Dhandho (pronounced dhun-doe), literally translated, means "endeavors that create wealth." In The Dhandho Investor, Mohnish Pabrai demonstrates how the powerful Dhandho capital allocation framework of India's business-savvy Patels can be successfully applied and replicated by individual value investors in the stock market. The Patels, a small ethnic group from India, first began arriving in the United States in the 1970s as refugees with little education or capital. Today, they own over $40 billion in motel assets in the United States, pay over $725 million a year in taxes, and employ nearly a million people. How did this small, impoverished group come out of nowhere and end up accumulating such vast resources? The answer lies in their low-risk, high-return approach to business: Dhandho. This book will show you how to use that same technique to generate high returns in the stock market.
Pabrai's hedge funds, Pabrai Investment Funds, have outperformed all of the major indices and over 99% of other managed funds. $100,000 invested with Pabrai in 1999 was worth over $659,000 by 2006an annualized return of over 28% after all fees and expenses. In this book, Pabrai distills the methods of Buffett, Graham, and Munger into a user-friendly approach applicable to individual investors. Combining their legendary investing wisdom with the business acumen of the Patels, Pabrai lays out the Dhandho framework in an easy-to-use format that will help any investor significantly improve on their results and soundly beat the marketsas well as most professionals.
Pabrai also details each deceptively simple Dhandho concept in a straightforward, entertaining fashion, with individual chapters that explain why you should: Invest in Simple Businesses, Fixate on Arbitrage, Invest in the Copy Cats Rather than the Innovators, and other simple but proven concepts for low-risk, high-reward Dhandho investing.
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Top customer reviews
Pabrai offers extensive illustrations using the Patels, whose heritage was from Gujarat India, but who had migrated to and succeeded in Uganda, only to be expelled by Idi Amin. Only a few thousand came to the USA in the early 70’s, but now half the motels in the US are owned by Patels. They accomplished this feat using the principles of the DI. Pabrai also uses examples from Branson (think Virgin Airlines), Bill Gates, and his own experience.
How does one find such a business? Pabrai gives specific recommendations for places to search for distressed companies. He also discusses Joel Greenblatt’s “Magic Formula," found in "The Little Book that still Beats the Market," in detail. If you want to be a Dhando Investor Pabrai says, “Read voraciously, and wait patiently.” Monish explains that there is no certainty in investing, but with proper investigation and selection one is prepared to make “few bets, big bets, infrequent bets.” Following his advice you will surely emulate his principle of “Heads I win; Tails, I don’t lose much."
I also want to thank Phil Town for telling me about Monish Pabrai’s book. I strongly recommend both of Phil’s books. "Rule # 1 Investing" eloquently explains the principles of value investing as exemplified by Warren Buffet. In "Payback Time" he goes into further detail explaining how to improve your returns.
In conclusion, thank you Monish!
We can relate this story to value investing in the modern world: buying a select few, good companies when nobody else wants them. Few, focused, big investments on companies that become undervalued through market fluctuations or bad news.
It's a great read and I highly recommend it.
the investment models that Mr. Mohnish Pabrai uses to obtain superior investment returns.
They are the same as the ones used by Mr. Warren Buffette and Mr.Joel Greenblatt
but in his book they are explained in a more indepth and understandable way.
The book is entertaining with many examples of successful applications of superior investment methods.
And the best of this is that they are simple and easy to understand.
Mr Pabrai is gifted in investing, and in writing in a simple and entertaining way.
I highly recommend this book, it clearly explains investment strategies and tactics
that you may find in other books but they are not explained as clearly and easy to understand as in
The Dhandho Investor.
Thank you Mr. Mohnish Pabrai for sharing your valuble
Dhandho is also a good reminder that other cultures and traditions are instructive when it comes to understanding business and investment. Instead of more instances of guys in Brooks Brothers suits, we read about poor Indian immigrants and the characters from the Mahabharata. Pabrai is clearly proud of his own culture but these perspectives are also genuinely fresh and useful.
This is a book to buy for a curious, reflective 18 year old. If any of the lessons stick you will have done him or her a great service.