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If you are a hyperactive person who is always looking for action, this is not the business for you.” 5) Don’t buy stocks, buy the Businesses. “If you are a kind of person who likes to watch paint dry, this is the business for you. And there was no good reason to sell it.” And it had its run in the next 15 years after I sold. “I held the stock for 6 years and the stock did nothing and I sold it. Mohnish shared the example of a company he invested in – Blue Dart which is the FedEx of India. “The number one skill set that an investor needs to have is extreme patience” What is the most important quality an investor needs to have? Mohnish Pabrai was asked in a university talk, These businesses are what Mohnish calls “No Brainers” 4) Extreme Patience And there are some businesses which are so obvious investment options that you don’t need much calculation. So, rather than trying to look for some secret, complicated ratios and some complex cash flow calculations, try to find simple businesses. “Investing is more of an art than science” And this is somewhat similar to what Rakesh Jhunjhunwala advised – “don’t have analysis paralysis”Īlso Read: Top 10 lessons I learned from Rakesh Jhunjhunwala.Īs an investor in the market, one must understand, I think this is some serious wisdom from the legend here.
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“The most important thing more than the checklist is to look for the no brainers” “Don’t do the math till the 4th decimal to invest, look for the no brainers” “The trick I have learned in investing is – And they typically don’t need any debt”.Also, they have very high Return On Equity (ROE).“Companies that have potential to become tenbaggers to hundred baggers are the businesses with huge tailwinds.” (Tailwinds in financial terms means these businesses have all the factors moving in their favour) Investors are always looking for stocks that can be multibaggers. And he applied it in the stock market.Ĭheck out this blog by Mohnish Pabrai. Mohnish realised the power of this Dhandho principle that the Patels use while doing business. And recession meant that people would prefer to stay in cheap motels instead of costly hotels.Įven if the business failed, they could use the motel as a house, so practically no downside. Since there were practically no costs of running the business. So, this was a low risk and high reward kind of a business. And the profits accumulated over 1-2 years were used to buy more motels.Also, all the family members used to do the business work like cleaning, reception, etc.And they used to live in 2-3 rooms of the hotels and the rest of the rooms were rented.So basically the Patel’s (instead of buying houses) bought motels cheaply during the 70’s when the real estate sector was down.It is basically an approach to doing business. The word Dhandho is a Gujarati word for business.
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And when the roommate would come back Sunday night, he would have all these stories (that he would tell Mohnish) of all the business deals his relatives had done.Īnd at the end of the story he would say, Now, several times on the weekends, this roommate would disappear to meet different family members. And that roommate had a bunch of relatives who had multiple businesses in the US in the ’70s and ’80s. This ‘low risk, high return’ investing style is inspired by “Dhandho principal” that the Patels (people belonging to a Gujarati community from India) use.Īlthough not a Gujarati himself, Mohnish picked this Dhandho principal from his college roommate. He calls it “Heads – I win big, Tails – I don’t lose much” Mohnish is mainly known for his investing style of ‘low risk and high reward’ investments. 1) Dhandho: Heads I Win Big, Tails I don’t Lose Much So, here are the top 10 lessons I learned from Mohnish Pabrai. (which they both claim was “worth every penny”)Ī true Buffett and Munger disciple, Mohnish has achieved tremendous success in the world of stock market investing.Īnd we can learn a lot from Mohnish and his investing style. He came to limelight when he famously bid $650,000 US along with Guy Spier to have lunch with Warren Buffett for a charity event. Mohnish Pabrai is without a doubt, one of the best value investors in the world.