Make no mistake, the author's investment methodology is different from how Buffett and Munger currently operate at Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B). This concept makes sense to me intuitively and is how my wife and I try to invest. As the author puts it, "heads I win, tails I don't lose much." The thought process goes that if you only invest (or risk capital on a business) when the odds are slanted in your favor, you are far more likely to succeed over time. In a single sentence, this business/investing methodology encourages the practitioner to recognize a given venture's potential upside and downside, but only go ahead with the venture when the potential downside is limited and the potential upside is significant. If you're going to imitate someone, you might as well go for one of the best investors of modern times. Yep, while his investment methodology is very similar to the one Warren Buffett employed in his early partnership, the structure of the author's partnership is virtually identical to that of Warren Buffett's early partnership.
In fact, he readily admits that he is a ready cloner (or imitator) who has succeeded by imitating other successful investors. He is quick to tell you that he didn't invent this investment methodology. The author tries to do the same and has a fantastic record of investment returns to show for it. It is at those times of inefficiency that I have tried to make my largest investments. I am not a staunch believer in the Efficient Market Theory, instead believing that global equity markets are generally inefficient. as we have all heard from mainstream academics. The central premise of this book is that high business/investing returns are not inseparable from high-risk opportunities. So the reader immediately recognizes that this methodology is the Indian/Pakistani/Bangladeshi mindset for conducting business and investing. He goes further to say that the common street translation is simply "business". that means endeavors that create wealth". The author tells us, "Dhandho is a Gujarati word. The premise of Dhandho investing is, as the author repeats time and time again, "heads I win. In this book, the author brings an engineer's clarity in sharing his low-risk value investing methodology. In this case, I was thrilled to see that the local library had The Dhandho Investor available for loan. This downtime has given me plenty of time to read, and a different library system from which to choose my selections. At the moment, we are relaxing with family for a week in the Midwest, before continuing on our extended road trip. As I've mentioned before, I am a voracious reader. Ever since I watched Mohnish Pabrai's Google Talk on Youtube, really.
#DHANDHO INVESTOR SUMMARY HOW TO#
Learn from FAA on how to build checklist.I can honestly say that I have been looking forward to reading this book for months. I’d reverse that somewhat to say 5x and 4x first, rest of 80% with 2-3x and 4x for the next 10% and 5x for the next 10% etc.īuilt checklist (and keep examples of failures in parentheses again each of this checklist failures). Pabrai said: 2-3x for 75-80% of AUM, 4x for next 10%, 5x for next 10% etc. Why he works alone (as Buffett does too)? – there is a natural tendency for action in a team.
Is it a business I understand very well–squarely within my circle of competence? (You don’t need to have a large circle, but you need to know your circle of competence.).
7 Questions One Must Ask Before Making an Investment –