The Dhandho Investor: The Low-Risk Value Method to High Returns

Pabrai has written a great book for value investors. Like Pabrai, I have followed Buffett/Munger for decades and attempted to emulate their investing style and philosophy. In this book, he goes through several examples of his investment strategy which includes finding stocks where if you are wrong you don't lose much and if you are right you win big, very big. He tends to make large and infrequent bets. Similar to Buffett he waits for the big fat pitches to come along and then swings for the fences with sizable bets on them.If you have studied Buffett and Munger you will find a lot of his investment philosophy familiar of course but it is a good refresher and Pabrai communicates these principles well. I found the book an easy read and enjoyable. Other investment books sometimes I have to force myself to push through them but Dhandho was a breeze.One big thing I learned from Pabrai that I either never picked up or internalized properly was the idea of making big bets. Over the years if I had a high conviction stock I would make an equal size bet on it. I might hold 30 to 50 stocks that make up the bulk of my portfolio. If one got too big I'd pare it down if my conviction on it was lower in order to keep diversification and lower overall risk. In hindsight, this was likely a mistake on my part.Pabrai introduced me to the "Kelly Formula" which is a betting formula that gives you an idea of how big a bet you might want to make on a particular investment. Using this formula I found I probably should have made bets that were 10% or at times 20-30% of my total portfolio. In reality, most of my original stock investments never exceeded just 2% to 4% of the total portfolio value. As a result, I watched some higher conviction positions become multi-baggers over the years that would have had a higher impact on the portfolio had I simply bought more.Of course, everyone says "I should have bought more of "xyz" but I look back and know there were some safe stocks I bought to be diversified with low risk and others that I had a higher conviction on that also came without undue risk. I simply did not apply the formula and bet as big as I should have.I highly recommend this book to any investor and especially value investors. I wish it was written a decade ago or more and that I had found it. I'm sure with the knowledge I have gained from Dhando Investor I would have mostly likely beaten the markets by an even larger percentage.

A good book, however I would have liked it if he explained his method of analyzing stocks more clearly. This is more of a general approach to stocks. Don't get me wrong, there is key information here that tells you how to find and analyze worthy stocks. There's a better book out there by Kenneth J Marshall, Good Stocks Cheap if you want to learn a solid method of value investing.

I am writing this review as an expression of gratitude to Monish Pabrai for writing this excellent and informative book. The word dhando, which comes from Sanskrit, means “endeavors that create wealth.” “The Dhando Investor” (DI) is described in detail in this interesting and informative book. The DI’s motto is “Heads, I win; tails, I don’t lose much.” Monish Pabrai describes the type of business that fits the DI. It is simple. It is subject to only a slow rate of change. It is distressed in a distressed industry. And, it has a durable moat. The DI wants to buy this business on sale, specifically half-off. Pabrai explains that Wall Street is confused by the difference between risk and uncertainty. He explains that the DI wants a low risk, high uncertainty business.Pabrai offers extensive illustrations using the Patels, whose heritage was from Gujarat India, but who had migrated to and succeeded in Uganda, only to be expelled by Idi Amin. Only a few thousand came to the USA in the early 70’s, but now half the motels in the US are owned by Patels. They accomplished this feat using the principles of the DI. Pabrai also uses examples from Branson (think Virgin Airlines), Bill Gates, and his own experience.How does one find such a business? Pabrai gives specific recommendations for places to search for distressed companies. He also discusses Joel Greenblatt’s “Magic Formula," found in "The Little Book that still Beats the Market," in detail. If you want to be a Dhando Investor Pabrai says, “Read voraciously, and wait patiently.” Monish explains that there is no certainty in investing, but with proper investigation and selection one is prepared to make “few bets, big bets, infrequent bets.” Following his advice you will surely emulate his principle of “Heads I win; Tails, I don’t lose much."I also want to thank Phil Town for telling me about Monish Pabrai’s book. I strongly recommend both of Phil’s books. "Rule # 1 Investing" eloquently explains the principles of value investing as exemplified by Warren Buffet. In "Payback Time" he goes into further detail explaining how to improve your returns.In conclusion, thank you Monish!

I very much like the examples in the book and that anybody can understand it. I am new to investing and it got me curious to learn more. The methods make sense and involve a large effort on your part to actually become a good investor. It tells you what not to do and helps guide you on where you should get started to learn what you need to do. It is a big picture view on a style of investing that seems to be successful. I can’t wait to apply it and zoom in on some of the lessons. Hopefully it will help me avoid major pitfalls and allow me to make wise, well thought out investment decisions.

Monish has written one of the best investing books I've ever read. Now, I have only 10 under my belt, but this was GREAT! He made the concept of being a Dhando Investor simple to understand. He used simple math and intrguing analogies to help the reader understand his points. This is a MUST if you consider yourself a value investor. I would also recommend this to anyone new to investing or looking for a new perspective on investing. Thank you Monish for this gem.

And will be reading this book over for years to come. For anyone who really wants to become wealthy, it starts with investing. And to be a good investor it starts with learning and reading books about it. Great book about low risk high return investing. Imagine having a person who’s good at it pointing you in directions to start researching and magazines to start reading and examples. This book is that

This is a pretty so so investment book. For £16 you basically get a rehash of several other value investing books. Nothing against the underlying investment philosophy per se (I follow a similar path) but really asking a PM with a c.7 year track record is pretty odd. I also googled the author and found quite a lot of stuff online about how his performance since writing this book has averaged down quite a bit (one stock went bust) and that he now limits his positions to much smaller percentages. Perhaps someone can confirm this. I did think some of the advocacy of large positions and very high concentration bordering on the irresponsible for a book likely read by mainly retail investors who as we know like a punt...then in the last chapter he almost reverses course and says indexing is okay as well.

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.Throughout the book Pabrai does a superb job of using examples from the Indian culture to subtly get the basic points across to us. The main thesis is finding investments that put the investor in a scenario where, as related to a coin toss, “Heads I win. Tales I don’t lose much”. 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.

Normally focusing my reading on "top 10 best ever" books on investing from the likes of Buffett and Lynch, for an intermediate + level I have gained more on how to actually invest than nearly any other book (also recommend You Can Be A Stock Market Genius Too).The compounding returns from this purchase are through the roof.

Bought this book at a discount to the current price.... Dhandho for life.Very good book on the Patels and the ethos of Dhandho style investing. It isn't a step by step guide on how to invest but is more of a guide on the Dhandho mindset. Very interesting particularly on the risk factor/odds on good investments or 'bets' and I love the 'well you can always get a job working for someone else if it goes wrong' approach. Overall a very good read and useful to anyone looking to make their own investment portfolio.

What is there not to like about Mohnish? For a normal layman like myself, this book is not really designed for me as I do not have the aptitude to pick good singular investments in the form of stocks or whatever. But regardless of this, it is a very interesting read and Mohnish's humility in a position of such success is purely inspirational. Another really good upside to this book is the understanding it gives you on how East Asian culture have helped migrants dominate certain industries abroad, this has opened up as good conversation topics over the years.