The Dhandho Investor: The Low-Risk Value Method to High Returns

by Mohnish Pabrai

Mr. Buffett hosts business school students from over 30 universities every year. The schools represent a wide range—from Harvard and Yale to the University of Tennessee and Texas A&M. The students get to ask him questions on almost any subject for over an hour before heading out to have lunch with Mr. Buffett at his favorite steakhouse. Virtually every group asks Mr. Buffett for book recommendations. Mr. Buffett’s consistent best book recommendation for several decades has been Benjamin Graham’s The Intelligent Investor,1 as he stated to students from Columbia Business School in Omaha, Nebraska, on March 24, 2006: The Intelligent Investor is still the best book on investing. It has the only three ideas you really need: 1. Chapter 8—The Mr. Market analogy. Make the stock market serve you. The C section of the Wall Street Journal is my business broker—it quotes me prices every day that I can take or leave, and there are no called strikes. 2. A stock is a piece of a business. Never forget that you are buying a business which has an underlying value based on how much cash goes in and out. 3. Chapter 20—Margin of Safety. Make sure that you are buying a business for way less than you think it is conservatively worth.2 —Warren Buffett