Product Description

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.

Product Details

• Amazon Sales Rank: #12744 in Books
• Published on: 2007-04-06
• Original language: English
• Number of items: 1
• Binding: Hardcover
• 208 pages

Review
"Today's greatest rising investor"--Motley Fool

"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

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 2006—an 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 markets—as 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.

From the Back Cover
Praise for The Dhandho Investor

"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

Customer Reviews

A Great Book but...
This was a great book by someone who had great market results. He clearly states his objectives and how to do it. he gives great examples so we can follow his footsteps. However he used to have amazing returns (even better ROI than Warren Buffet). But since I got the book, almost 2 years ago, he has not been doing well at all in his fund. So I am not sure yet that his system works in the longer term. Right now he is way down this year.

Save your time and money
I am not trying to hate on this book - I saw a review of this on CNBC and they selected one passage and I was really intrigued by the idea of "heads i win, tails i dont lose much" (by the way, the book repeats this north of 20-30+ times and I got extremely sick of this as I went half-way through the book) and decided to read this on my own time. I have always found a lot of credibility in analysis driven by limited downside risk or "value" investing in the sense of investing at close to book value or when the probability of success is high given entry cost is low.

However, I could not help but loathe Pabrai's seemingly infatuated mindset with Buffett. This book is essentially 1) very rudimentary cash flow and financial background (if one can even call a few tables of numbers cash flow analysis), 2) half of the book is a ra-hash of either direct quotes from Buffett or how difficult Pabrai finds to mask his vague attempt to almost equate his investing style to that of Buffett's, and 3) largely a promotion of Indian-Hindu concepts as they relate to very prevalent and hardly insightful financial concepts.

I would not recommend anyone read this book. I usually don't leave reviews and this is the first one I have done - I promptly threw the book out after I read it that's how much I could not stand wasting 2-3 hours reading this guy's writing.

trite, simplistic analysis written for a sixth grader
An easy read but essentially trivial. A hotelier example and a few other vignettes are used to make the case that there's a free lunch (no risk, high reward). As if it was that easy. Actually the hotelier example (investing a couple of million in a hotel in the middle of the So Cal desert, after 9/11, that just happened to work out) makes the case there is no free lunch. A better book is by Dreman, on contrarian investments, or "Fortune's Formula" by Poundstone, if you're into this thesis of a free lunch.

Avoid this book like the plague.