The Dhandho Investor By Mohnish Pabrai
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.
Summary of The Dhandho Investor
One of the most vivid examples of Wall Street’s inability to distinguish between risk and uncertainty is the trading pattern and pricing of Frontline’s stock (FRO) in the third quarter of 2002. One of the lists I scan periodically is Value Line’s weekly listing of stocks with the highest dividend yields.
Usually, there are, at most, a handful of businesses sporting yields of 10 percent to 12 percent. A high dividend yield is sometimes indicative of a stock being undervalued. So, like low P/E or 52-week low lists, it’s a worthwhile screen.
The Dhandho Investor: The Low – Risk Value Method to High Returns PDF
Author(s): Mohnish Pabrai
Publisher: Wiley, Year: 2007