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It is very possible to find a great company with a stock price significantly below the sale value of its assets alone. The average person, or even a savvy investor would be blown away at some of these low risk opportunities that present themselves from time to time, especially in wild markets like today’s. These characteristics bundled up all in one business are not necessarily easy to find, but they are out there and the patient investors like Pabrai are out there to find them. And it is when these great businesses are selling at a low and attractive price, that this low-risk/high-return scenario becomes available. But the truth is that you can do your homework and find businesses that have a ‘durable’ competitive advantage, have proven themselves through years of profitable business and have strong assets and the future ability to make great money. Sounds pretty ridiculous and most people tend to just dismiss it. Warren Buffett has proven this for decades as he invests with the number one rule of “don’t lose money”. Mohnish shows us that with value investing, that is not the case. Traditional investment has always taught that if you want a higher rate of return, you have to settle for a higher level of risk. 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. The main thesis is finding investments that put the investor in a scenario where, as related to a coin toss, “Heads I win. Throughout the book Pabrai does a superb job of using examples from his India culture to subtly get the basic points across to us. The beauty of the book is that he writes in a way that is simple and understanding enough for any everyday person to digest, which makes this a great place for even the newest investor to start learning. He wrote The Dhandho Investor to describe it how he’s experienced it. When it comes down to it, most would prefer the excitement of gambling than to conservatively investing in great businesses over the long term. My guess is it has a great deal to do with the lack of excitement and activity that goes with his strategy. But for one reason or another, few have really followed in Buffett’s shoes. Especially given that we know how powerful modeling someone more successful than you has proven in the past. You’d think mimicking this approach would be a common occurrence. This approach is focused long-term value investing inspired by the likes of Warren Buffett and Ben Graham. He has taken an approach that has been proven more successful than any other over the long term and knocked it out of the park. In the investment space he is one of my most admired mentors. Since I first began reading about Mohnish a few years ago, I have been in awe, first due to his intense love for life and the people around him, and second for his incredible achievements as a businessman and value investor.
DHANDHO INVESTOR AUDIO PROFESSIONAL
As a value fund manager, relatively new to the professional space, attending the meeting was an incredible experience. First off, no I am not a Pabrai Funds shareholder, but as one of the many demonstrations of Mohnish’s appreciation for people and helping them in their quests for success, he extended me an invitation. I have had the pleasure of spending time with Mohnish on two occasions, first in Omaha this year and the most recent being his annual shareholders meeting in Huntington Beach, CA. At 18.8% a year since 1999, the author has the track record to prove it. A quick and inspiring read that will have anyone believing value investing is the only true way to amass significant wealth in the market over the long run. I just finished The Dhandho Investor for the second time, and doubt it will be my last. I wanted to learn what made it real for him. Why I Read this Book: Pabrai has proven his application of value investing to be hugely successful. In All Topics, Career & Purpose, Entrepreneurship, Investing & Finance