The Dhandho Investor: The Low-Risk Value Method to High Returns Hardcover – Illustrated, April 6, 2007

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.

Great ideas and framework. Mohnish P. freely shares his framework and concepts. He also shares valuable tips and resources for a reader to explore this path.

The book is certainly entertaining and rags to riches stories are always uplifting, but: Who is your audience Mr. Pabrai? Not many of us plan to start an airline or a motel chain or a business of any kind. Most investment book buyers, I presume, want to make money with stocks in the stock market or possibly with a more diversified portfolio of securities. As other reviewers have noted, many of us didn't buy this book to read Buffett, there are plenty of other sources for Buffett's lore and wisdom. The Patel story is certainly a most appropriate opening for the book but the Virgin story is superfluous. Never be afraid to write a short book, the book's value is not measured by the number of pages but by the power of the concepts. Very powerful concepts can be expressed by just a few letters as in E = MC2 (squared).On the other hand, tying investing in the stock market with the real world of business is an interesting idea. For example, in a commodity type business the low cost producer is often if not always the winner as is the case of Southwest Airlines and the Patel motels. Since the stock market is just another business and stocks just another commodity, becoming the low cost "portfolio producer" should also lead to good performance. As I have developed my own investing skills I have been learning how to get good discounts on securities in the stock market. Lowering your cost is a surefire way of increasing your yield.Another very interesting theme in the book is the exit strategy Mr. Pabrai uses in his own fund. Exit strategies are mostly neglected in the literature in favor of how to buy stocks. But a "deal" is not complete until the security is sold and a "deal" is not profitable until the security is sold at a profit. I have found, specially with options -- which are perishable and volatile -- that selling as soon as the option reaches its price target is better than holding on for a little more return. Sell and go for the next deal is what Mr. Pabrai advises and I concur.