I am always looking for a good investing book to read. A few years ago I stopped by my local Barnes & Noble store looking for a good investing book to read. I really didn’t find too much that interested me until I came across a book written by Mohnish Pabrai. I remembered Pabrai’s name because I wanted to invest some cash with Pabrai back in 2007 but fell short of his firm’s investing requirement. I had the $100k minimum investment but fell short of the $4 million dollar minimum net worth requirement. So, I picked up his book, The Dhandho Investor and figured I would peruse it.

Pabrai is a Buffett disciple and quite the successful investor. Pabrai is famous for paying $650,100 for lunch with Warren Buffett.

The Dhandho Investor Book Review

The Dhandho investor is one of my absolute favorite investing books. Anyone can benefit from reading this book. It is great for beginning investors and sophisticated investors alike. It’s not technical at all like the Intelligent Investor and does a great job of explaining how to properly invest. Pabrai’s book deals with dhando investing. Dhandho means “endeavors that create wealth“.

He starts out by explaining how investing is easy if you just replicate the methods of other investors. Pabra illustrates his point by looking at the Patels. The Patels are Indian immigrants that migrated to America. He explains the reason that Indians own 70% of the hotel/motel chains is because of replication. One Indian American became successful at it and the rest followed his strategy and duplicated the success.

He then applies the same strategy to people looking to make money investing. He talks about the importance of making Big Bets Infrequently. Most investors put just as much money into their best ideas as they do their worst ideas. This is a big mistake. He explains how his best stock ideas will get 50% to 70% of his investment capital and his worst ideas get less money allocated to them.

The Dhandho Investor’s Strategy In Action

I follow this theory as well. I may own 50 some odd different companies but most of them only have a couple thousand in them. My best ideas get the bulk of my money. It’s a risky strategy but I trust my analysis. I am all for most investors having equal diversification amongst different asset classes but I feel that I can make the most money by putting more money in specific stocks.

I have never been so burned by a company that I have lost substantial amounts of money because I don’t buy junk stocks or penny stocks. I love to buy out of favor stocks that other investors are throwing away. I will also buy small and mid caps but only quality companies with decent balance sheets.

Buy Like Buffett – Make Money Investing The Warren Buffett Way