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One Up On Wall Street SUMMARY Conclusion Chapter 20 – 50,000 Frenchmen Can Be Wrong

The market, like individual stocks, can move in the opposite direction of the fundamentals over the short term Be optimistic about America and investing in general Market declines are great opportunities to buy stocks in companies that you like You can never predict the market It takes years, not months to produce big results You can make serious money by compounding a series of 20-30 percent gains in Stalwarts Stock prices often move in opposite direction but the long term, the direct and sustainability of profits will prevail Buying a company just because its cheap is a losing strategy Selling an outstanding fast grower because its stock slights overpriced is a losing technique You don’t lose anything by not owning a successful stock Stock doesn’t know that you own it Don’t be attached to a winner Don’t stop monitoring the story If you don’t think you can beat the market then buy a mutual fund Keep an open mind to new ideas Read One Up On Wall Street by Peter Lynch Chapter 19 full su...
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The Dhandho Investor SUMMARY - Chapter 5 The Dhandho Framework

There are 9 principles that constitute the Dhandho framework

1. Focus On Buying An Existing Business
Papa Patel bought and existing business with a long history of operations that he could analyze.

2. Buy Simple Businesses in Industries With an Ultra-Slow Rate of Change
As long as humans travel long distances and have a need to sleep, there will always be a need for motels and hotels.

3. Buy Distressed Businesses in Distressed Industries
Papa Patel knew he was buying motels during distressed conditions and getting a great price that is based on near-term prospects. Mittal loaded up on assets in a severely distressed industry in severely distressed countries and geographies. The very best time to buy a business is when it’s near-term future is unloved.

4. Buy Businesses With a Durable Competitive Advantage – The Moat
Determine the competitive advantage and the durability of it. With extreme low cost Papa Patel was able to charge lower than anyone else. Being a low cost operator is one of the moat.

5. Bet Heavily When The Odds Are Overwhelmingly In Your Favor
Papa Patel could have failed but his losses are pretty minimal if he failed. Most of the Dhandho entrepreneurs either do nothing or place miniscule bets. When they face overwhelming odds in their favor, their act and place a large bet.

6. Focus on Arbitrage
Arbitrage is an attempt to profit by exploiting price differences in identical or similar financial instruments. For example, if gold is trading in London at $550 per ounce and in New York at $560 per ounce, assuming low frictional costs, an arbitrageur can buy gold in London and immediately sell it in New York, pocketing the difference. Branson’s arbitrage is his innovative offerings.  Eventually many of it will get copied by competitors, the moat shrinks and the arbitrage spread collapses but it can last for a decade or two.

7. Buy Businesses at Big Discounts To Their Underlying Intrinsic Value
Papa Patel intrinsically understands the concept of minimizing downside risk before ever looking at upside potential. Margin of safety is the secret.

8. Look For Low-Risk, High-Uncertainty Businesses
Papa Patel’s motel purchase did not have much risk associated with it. However, the outcome had significant uncertainty associated with it. Dhandho entrepreneurs first focus on minimizing downside risk. Low-risk situations, by definition, have low downsides.

9. It’s Better To Be A Copycat Than An Innovator
Papa Patel simply followed what the other Patels did. He did not innovate as well. All that he did was to minimize the costs naturally by using his family as employees.

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