Tag / Value Investor

by capital flowing

The Dhandho Investor

51gn-ygw5ol-_sx330_bo1204203200_Continuing the path of becoming a value investor I have read a couple of books lately on the subject. I feel that I’ve got to a point where these books are a little repetitive, I feel that now I need to put this knowledge into practice.

One of the books I read was the Dhandho Investor written by Mohnish Pabrai where he explains his investment low-risk value method to high returns. Mhonish started first as an entrepreneur and later got into the investment business, and has replicated Warren Buffet’s investment methodologies and practices. He starts the book by explaining how the Patel’s in the US naturally use this investment method, and how they have applied it since arriving to the US. Most of the motels and hotels in the US are owned by Patel’s who come from the Indian State of Gujarat. They are hard workers and invest in opportunities at the right moment, they are patient and constantly looking for new opportunities, but get into the investment at the right moment.

I liked Mohnish comment about the stock market, he mentioned that while private businesses can offer higher returns in general than the stock market, it is a great opportunity to have platforms that allow us to purchase public stocks from a great range of mature companies.

I really enjoyed the book, it was a little repetitive from other value investing books, but with a slightly different approach.

 

 

 

 

by capital flowing

Invirtiendo a Largo Plazo

Francisco García Paramés

Image from: frdelpino.es

When I was younger I thought that everyone who invested in the stock market was gambling with their money, Francisco García Paramés thought the same way when he was younger and today he has the record of managing the most profitable fund in Spain. García Paramés was born in La Coruña, same city as the founder of Inditex Armancio Ortega. Paramés is considered the spanish version of Warren Buffet for his long term value investment strategy. In his book “Invirtiendo a Largo Plazo”(Long Term Investing) he talks about his experience as a fund manager and how he developed his long term investing strategy. Generally he mentions that stocks can give you a higher return on investment than any other value. He agrees with Warren Buffet that we need to analyze a stock as if we are buying the whole company and not only a ticker. As many other fund managers he says that if people are interested in investing their savings but do not have time to analyze the stock market and have a lot of patience, they should be better off by investing in an index fund which could also give you a higher return on your investment than a hedge fund. The downside is that investors would not be able to take full advantage of the inefficiencies in the market.

Something that impressed me about this book is that he does not believe that central bankers offer a great benefit to the economy and that countries would be better off by backing their currency with gold. Charles Wheelan in his book “Naked Money” is against this and mentions some setbacks about this thinking. He mentions that countries can experience a higher economic growth than their rate of gold extraction and that makes the economy not reliant on the resourcefoulness of its citizens and businesses. While countries with paper money have the flexibility to adjust their monetary policies according to inflation, economic growth, and productivity. The downside about paper money is that central banks can create big problems for the economy if they are not careful, this has happened to Zimbabwe, Argentina, Mexico, and other Latin American economies.

This has been one of the best books I have read on value investing, very interesting to learn from his own experiences of how he became who he is today. I really liked the fact that he included a list of books that have inspired his strategy throughout his life.