Investing Books for New Investors: The Dhandho Investor
For a more contemporary take on value investing, any newbie to the investment game should read Mohnish Pabrai’s The Dhandho Investor.
Pabrai is a master investor who explains the basics of deep value investing in plain English. He doesn’t delve into arcane accounting terms or geeky finance-speak. And for new investors, that’s precisely what you want from your introductory investment books.
Pabrai’s basic investment philosophy draws heavily from the experience of the Patels — a group of ethnic Indians who immigrated to the United States in the 1970s after being pushed out of Uganda by dictator Idi Amin. The Patels came to America with virtually no capital and little formal education, yet they managed to build a hotel empire.
Today, a disproportionately high number of roadside motels are owned by the Patels. And they managed this by using a simple “coin toss” rule of thumb:
1. Heads, I win.
2. Tails, I don’t lose much.
In other words, they invested when the risk was low and the upside was high.
Pabrai has no special metric or formula. You’re not going to copy his trading moves and make millions — though his book will absolutely help train your mind to think as a contrarian, which is an absolute necessity for success as a value investor.