Patel made good returns on the investment made. As the prices were less, customers chose Patel’s motel compared to other American run motels. Since their expenses were low compared to other motels, they reduced prices. Simplistic lifestyle coupled with doing all the chores by themselves, they were able to keep the expenses low.įor the business, Selling Price-Expenses=Profit. Patel now has a 20-room motel all for a family of 5 people. As a result, when Patel approaches the bank, they give him what he wants. So that they can go back to collecting interest payments. Their best bet is someone who wants to buy and run it. The interesting thing to observe here is, why would the bank let the Patel take over?Ĭoz they themselves don’t have the capability to run the motel by themselves. He takes a loan for the rest of the $40,000 from the bank that put up the motel for sale. But he raised another $5000 from other Patels. The Dhandho Investor in him knocks his senses. But one fine day, a Patel notices a board outside a motel, “For Sale- $50,000”. So, when the Patels migrated to the USA, they had very little cash. The owners of the Motels weren’t able to pay the interests to banks. Because of the recession, Americans reduced frivolous expenses. Owing to poor economic policies, the USA faced a recession in the 1970s. So, in the 1970s or so, Patels migrated to the USA from Uganda. The book starts with the example of how Patels became the king of Motels in the USA. Without any further delay, Let’s get started. Over the due course of the book, this principle keeps repeating in the form of, “Heads I win, tails I don’t lose much”. The core principle of Dhandho Investing is to choose opportunities that have a minimal downside and a huge upside.
So, help yourselves and don’t continue reading if you’re substituting this for the original book.ĭhandho means endeavors to create wealth aka Business.Īn Ultra-Short Summary of Dhandho Investing. Moreover, I’m writing it here to validate my observations from you.
So I may or may not have understood the concepts completely. The summary written below is my interpretation of the principles mentioned in the Dhandho Investor. As you may have noticed, this in no means a substitute to the original book. Rule #8: Better to be a copy cat than innovators.īecause the book has a foreword, it’s my responsibility to write a foreword for this as well.Rule #7: Look for low risk, high-uncertainty businesses.Rule #6: Buy Businesses at big discounts to their underlying intrinsic value.Rule #5: Bet heavily when the odds are overwhelmingly in your favor.Rule #4: Buy Businesses with a durable competitive advantage.Rule #3: Buy distressed businesses in distressed industries.Rule #2: Focus on buying Simple businesses with an ultra-slow rate of change.The Dhandho Framework by Mohnish Pabrai.