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The Dhandho Investor: The Low-Risk Value Method to High Returns Hardcover – Illustrated, April 6, 2007
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"How to invest the way an Indian migrant with little money would do - by looking for companies with little downside…" (Financial Times, Tues 26th February)
From the Inside Flap
"Mohnish Pabrai is a relentlessly insightful thinker who delights in decoding the esoteric world of finance and also knows how to tell a good yarn. Whether you're mystified by what drives stock prices up and down on Wall Street or you're sure you know, you'll understand better when you read this book. Pabrai's tales of high finance and his clever examination of the core principles of deep value are packed with handy ideas you should use in your own investing."
—Stephane Fitch, European Bureau Chief, Forbes
"I read The Dhandho Investor from start to finish in one sitting—I couldn't put it down. Mohnish shares the 'secrets' of his extraordinary success and has made a significant contribution to the literature on value investing."
—Whitney Tilson, General Partner and founder of T2 Partners LLC
Managing Editor and founder of Value Investor Insight
Chairman of Value Investing Congress
"All of the techniques you need to attain high returns on your investments are here, explained through the examples of successful entrepreneurs and of Pabrai, himself an accomplished prodigy of Buffett's methods. Everyone must understand this methodology if they are to do well in the stock market."
—Timothy Vick, Senior Portfolio Manager, The Sanibel Captiva Trust Co.,
author of How to Pick Stocks Like Warren Buffett
"The Dhandho Investor has nailed it! Pabrai has simplified the strategy for successful investing. 'Heads, I win; tails, I don't lose much!' I don't have to buy a whole business, just purchase the publicly traded stocks of a few 'right' businesses. I suggest this book to anyone looking to hone their investment skills."
—Patrick Fitzgerald, President, Fitzgerald Management
- Publisher : Wiley; 1st edition (April 6, 2007)
- Language : English
- Hardcover : 208 pages
- ISBN-10 : 047004389X
- ISBN-13 : 978-0470043899
- Item Weight : 14.1 ounces
- Dimensions : 6.1 x 0.9 x 9.1 inches
- Best Sellers Rank: #20,352 in Books (See Top 100 in Books)
- Customer Reviews:
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Top reviews from the United States
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If you have studied Buffett and Munger you will find a lot of his investment philosophy familiar of course but it is a good refresher and Pabrai communicates these principles well. I found the book an easy read and enjoyable. Other investment books sometimes I have to force myself to push through them but Dhandho was a breeze.
One big thing I learned from Pabrai that I either never picked up or internalized properly was the idea of making big bets. Over the years if I had a high conviction stock I would make an equal size bet on it. I might hold 30 to 50 stocks that make up the bulk of my portfolio. If one got too big I'd pare it down if my conviction on it was lower in order to keep diversification and lower overall risk. In hindsight, this was likely a mistake on my part.
Pabrai introduced me to the "Kelly Formula" which is a betting formula that gives you an idea of how big a bet you might want to make on a particular investment. Using this formula I found I probably should have made bets that were 10% or at times 20-30% of my total portfolio. In reality, most of my original stock investments never exceeded just 2% to 4% of the total portfolio value. As a result, I watched some higher conviction positions become multi-baggers over the years that would have had a higher impact on the portfolio had I simply bought more.
Of course, everyone says "I should have bought more of "xyz" but I look back and know there were some safe stocks I bought to be diversified with low risk and others that I had a higher conviction on that also came without undue risk. I simply did not apply the formula and bet as big as I should have.
I highly recommend this book to any investor and especially value investors. I wish it was written a decade ago or more and that I had found it. I'm sure with the knowledge I have gained from Dhando Investor I would have mostly likely beaten the markets by an even larger percentage.
The entire book is just a lot of words, no stats but a success story cherry picked and analogies.
The cost of the book can be justified, if the Kelly Formula was described in depth. The probality and odds mentioned are just what one feel like, no theory or anything backing. Just a general notional value. 90% odds of something working out, 2% Odds of loss. Really?
The Author has been lucky by not going with 98% bankroll investment as Kelly formula suggested.
Update - Taking down all stars for the reasons above.
Top reviews from other countries
Throughout the book Pabrai does a superb job of using examples from the Indian culture to subtly get the basic points across to us. The main thesis is finding investments that put the investor in a scenario where, as related to a coin toss, “Heads I win. Tales I don’t lose much”. The constant reference to this point through his various examples from life and the famous businesses of our day, hammers home the novel idea that there is a way to get satisfactory returns in the market without having to put yourself at high risk.
Very good book on the Patels and the ethos of Dhandho style investing. It isn't a step by step guide on how to invest but is more of a guide on the Dhandho mindset. Very interesting particularly on the risk factor/odds on good investments or 'bets' and I love the 'well you can always get a job working for someone else if it goes wrong' approach. Overall a very good read and useful to anyone looking to make their own investment portfolio.
The compounding returns from this purchase are through the roof.