Mohnish Pabrai – Background
Pabrai worked with Tellabs between 1986–91, first in its high speed data networking group, and then in 1989, joined its international subsidiary, working in international marketing and sales.
In 1991 he started his IT consulting and systems integration company, TransTech, Inc. with about US$30,000 from his own 401K account and US$70,000 from credit card debt. He sold the company in 2000 to Kurt Salmon Associates for US$20 million. Today he is the managing partner of the Pabrai Investment Funds (a family of hedge funds inspired by Buffett Partnerships), which he founded in 1999. (Source: Wikipedia)
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Mohnish Pabrai
Full text of 'The Dhandho Investor The Low Risk Value Method To High Returns By Mohnish Pabrai' See other formats. Value Method To High Returns Mohnish Pabrai that can be your partner. Read and Download PDF Ebook the dhandho investor low risk value method to high. Pabr a01ffirs.qxd 2/5/07 11:05 AM Page iii C1.jpg The.
You will also know Pabrai as having split a $650,100 lunch bill with good friend Guy Spier.
You can read Guy’s thoughts of the lunch and what he took away.
The Dhandho Investor: The Low-Risk Value Method to High Returns
In Mohnish Pabrai's Google Talk, see video below, he talks about the investment concepts in his book The Dhandho Investor – a book highly recommended in the Old School Value’s best investment book list.
Most value investors have read it already, but for those that haven’t, the Dhandho concept of doing business centers on risk vs uncertainty, circle of competence and margin of safety.
Here’s an excerpt from Amazon.
A comprehensive value investing framework for the individual investor
In a straightforward and accessible manner, The Dhandho Investor lays out the powerful framework of value investing. Written with the intelligent individual investor in mind, this comprehensive guide distills the Dhandho capital allocation framework of the business savvy Patels from India and presents how they can be applied successfully to the stock market. The Dhandho method expands on the groundbreaking principles of value investing expounded by Benjamin Graham, Warren Buffett, and Charlie Munger. Readers will be introduced to important value investing concepts such as “Heads, I win! Tails, I don’t lose that much!,” “Few Bets, Big Bets, Infrequent Bets,” Abhimanyu’s dilemma, and a detailed treatise on using the Kelly Formula to invest in undervalued stocks. Using a light, entertaining style, Pabrai lays out the Dhandho framework in an easy-to-use format. Any investor who adopts the framework is bound to improve on results and soundly beat the markets and most professionals.
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The Most Important Thing
Here are the sticking points from the video that you should take away.
“The most important thing is that, before you invest, you should be able to explain the thesis without a spreadsheet within four or five sentences. Typically I write down those sentences before I invest, so if I have a conversation with someone you could very quickly explain why this investment makes sense.” -Mohnish Pabrai, Google Talk July 21, 2014
I would add that once you have a firm understanding of the investment case, then you can dive into the numbers with stock analysis tools. Just don’t fall into the trap of making the numbers fit your thesis.
Patience is the Single Most Important Skill
“Good traits, or important traits for being a good investor, number one the single most important skill is patience. So I think the thing is that markets have kind of a way of deceiving us, because you know when you turn on CNBC and you see all those flashing red and green lights and all that, its inducing the brain to think that you need to act now, and you need to act immediately. Nothing could be further from the truth. You know Buffett always talks about having this punch card where in a lifetime you make twenty punches, and each time you buy a stock you punch it once so in a lifetime you’d make twenty investment decisions. Which means that if you started investing at twenty and ended at eighty, every three years on average you’d make one investment. And that is very hard for most people to do. And so, the more you can slow down your investing, and the more patient you can be, so the issue is that the time scales of which companies go through change and such, is very different from the time scales of which the stock market operates. So you really have to focus not so much on the stock market and have a lot more focus on the nature of change in businesses and be willing to be in there for a while.” -Mohnish Pabrai, Google Talk July 21, 2014
Watch Mohnish Pabrai's Talk
Play the video at 2x and you’ll be done in half the time.
Additional Reading
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Article by Hurricane Capital, Old School Value
In a straightforward and accessible manner, The Dhandho Investor lays out the powerful framework of value investing. Written with the intelligent individual. The Dhandho Invester is a book which primarily focusses on the Dhandho way of running a business I.e. buy cheap and make it big. Written by. The following are my highlights from The Dhandho Investor by Mohnish Pabrai of Pabrai Funds. He’s good friends with Guy Spier, the author of.
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Sep 07, Moaz Khan rated it it was amazing. He does not go into the detailed analysis of the cash flows of the companies This book by Mohnish Pabrai describes the concept dbandho value investing in the simplest terms.
It offers a comprehensive value investing framework for the individual investor. Any Indian reader would more or less expect some advice in the context of Indian stock markets ok, so this is about value investing In “Payback Time” he goes into further detail explaining how to improve your returns. Jan 17, Paul Szydlowski rated it it was ok. Investing Lessons from a Great Warrior. This book was recommended by Phil’s Town.
Pabrai gives specific recommendations for places to search for distressed companies. The author compares motel owners who migrated from his native India as a metaphor for value investors. Remember what Einstein said were the 5 levels of ascending intellect: Pabrai writes a great book, with relevant examples and lucid writingthat deeply enhances value investing.
Also almost a whole chapter is dedicated to financial websites for the American investor which can be useful titbit for investment tips. Pabrai] has encountered in [his] readings, interactions with friends, and various experiences Readers are expected to have a basic knowledge of equity markets and financial jargons like present value of future cash flows, intrinsic value, earnings per share etc.
He expounds on buying businesses on those which are low risk but may have high uncertainty as the securities are more often than not mispriced. Invest in Existing Businesses. Similar, but then WB is WB. To get the free app, enter your mobile phone number. Amazon Giveaway allows you to run promotional giveaways in order to create buzz, reward your audience, and attract new followers and customers.
Using a light, entertaining style, Pabrai lays out the Dhandho framework in an easy-to-use format. Safe and Secure Payments. Jul 09, Scott Dinsmore rated it really liked it. Believe me, this part is difficult, as it was for Abhimanyu. Set up a giveaway. One of the rare persons to differentiate between these two concepts. 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.
Pabrai has proven his application of value investing to be hugely successful. This book by Mohnish Pabrai describes the concept of value investing in the simplest terms. I simply did not apply the formula and bet as big as I should have.
Buy for others
Definitely a must read for anyone wanting to learn the value investing approach. In hindsight, this was likely a mistake on my part.
Showing of reviews. The methods make sense and involve a large effort on your part to actually become a good investor. Tails, I don’t lose that much! Editorial Reviews Review “Today’s greatest rising investor”–Motley Fool “How to invest the way an Indian migrant with little money woulddo – by looking for companies with little downside…” Financial TimesTues 26th February.
No trivia or quizzes yet.
Buying low priced, sometimes distressed assets can be hard to do because it seems counterintuitive. Amazon Renewed Refurbished products with a warranty. How does one find such a business? What I did like though were his Patel examples and certain case studies but not elaborating them, made me feel slightly disappointed again.
The Dhandho Investor: The Low-Risk Value Method to High Returns by Mohnish Pabrai
But you definitely walk away with rules that will make a more disciplined and careful investor. Overall, a very good introduction for people who are new to value investing. Two key takeaways- 1. Jan 09, Federico rated it really liked it Shelves: Product details File Size: Get fast, free shipping with Amazon Prime. O no pierdo nada. Request permission to reuse content from this site. Buffet, in a format that is easily and quickly digestible, this book offers value.
Pabrai also details each deceptively simple Dhandho concept in astraightforward, entertaining fashion, with individual chaptersthat explain why you should: And yet you walk away with a very solid understanding of the 9 key concepts that Pabrai has learned over the years from the examples he uses along with guys like Buffet, Graham, Spier, and others.
Aug 27, Andre Luis rated it really liked it. Cheers and Happy investing.
In giving the ideas of Graham and Dodd new relevance, primarily through his unparalleled investment track record, as well as his ability to communicate complex ideas in clear ways, Buffet can rightly claim part of these principles as his own.