Mohnish Pabrai: the DHANDHO Investor
Whenever you think of investment, for the west it is equities and for us, it is debt, gold, etc.
I think the world saw one of the worst financial crises from 2007 to 2009 and yet India Inc had a stable but yet sustainable growth. All thanks to a proven and soundtrack record of Indian Investment strategy in general and People in particular
We always believed in organic growth and as per the last SEBI data available, hardly 1% of the Indian investor’s are in the equity market and this % is now increasing
Well, equity is good if the country’s economy supports it, and it's bad when you have a growing desire to make quick money yet you do not know where you have invested and
worst yet not knowing where your money has been invested
this is true for all the middle-class families who would wish to grow their money and to that extent, this book gives you a chance to open up to a new world called “Arbitrage”
Warren Buffett did it, so did Microsoft and other companies who have given their shareholder's consistent returns….confused ??
Most of the strategy in the financial market is purely a copycat of a well-proven and well-spun plan.
1. Invest in sustainable business
2. Do not invest in industries that you do not understand. Warren Buffet does not understand Information technology. He cannot see tangible results. So he does not invest.
Did he lose? yes, he did but then the cost of loss is much smaller than the profits he made in business he understood. The classic case is Washington News and other business he invested in and continue to reap a huge profit.
At this point in time, Berkshire has given an investor more than 25% profit consistently over the last several years
3. Look for low risk and High uncertainty market. Now this one is a clincher. It's like saying, Head you win tail you do not lose much !!!!
The case of Patel’s from Gujarat ruling the Motel business in the US is worth taking a dig and learning to everyone who would want to be an entrepreneur
The motel business stands at more than $40 Billion in the US alone and this figure could be much higher across the globe. And this is all run by Indians mostly.
When patels migrated to the US, they barely had foot-n-Mouth existence and the US was going through depression in the 1970s..The motel business was losing and they saw an opportunity of arbitrage.
These businesses were selling at a cheap price….they bought them, turned them around into low-cost models, and made volume based profits which have sustained all the crisis of the market.
How did they see an opportunity which nobody could? How did buffet make profits when Index was losing and when wall street was downgrading the stocks, he was buying…How is it that one or two men could always be right when the Wallstreet was telling it otherwise…..The answer lies in the Ingrained philosophy which these guys follow irrespective of market conditions and those things are told in very simpler terms in the book
Financial independence is one of the best gifts we could give to our kids. So we need to be knowledgeable enough to impart the right strategy and information to them
Let this book be a step towards that direction……