Ace investor Mohnish Pabrai attributes his investment knowledge to these 6 books

The more you read, the more things you will know. This is why our parents and mentors also push us to read more books and imbibe the knowledge penned by some of the greatest minds we know of. You can learn practically anything and everything from books including investing and personal finance too. Some of the most prominent names in the investing world are self-taught. Take the example of Warren Buffett, Michael Burry, Rakesh Jhunjhunwala, Charlie Munger, and more who had never attended B-Schools in their lives.

Mohnish Pabrai is one of them. This Indian-American businessman and investor is the founder and Managing Partner of the Pabrai Investments Funds while managing Dhandho Funds too. His book “The Dhandho Investor” continues to be read and endorsed in management schools teaching their students the value of taking low risk to gain higher returns.

An unabashed admirer and copycat of Warren Buffett, Pabrai willingly shares the names of the books that not only educated him on the art of investing but helped him hone his skills on when, where, and how to put his money for better yields in the long run. Following is the list of books that Pabrai read to learn investing include:

Damn right: Behind the scenes with Berkshire Hathaway Billionaire Charlie Munger

This book is distinct from the tiring and insipid content that you find in most investment books. Rather, this book is more like an authored journey wherein the writer guides you through an exploration of the strategies, approaches, and background of Charlie Munger, a figure often regarded as the mastermind behind the renowned investor Warren Buffett.

Janet Lowe, an investment author, compiled the book using insights obtained from Munger, his family, and Buffett. The book delves into the private life of a man known for his secrecy, tracing his journey through World War II, the loss of a son, and a medical procedure that resulted in partial blindness in one eye.

Deep Value Investing: Finding bargain shares with big potential

This book by Jeroen Bos provides an exceptionally open and enlightening roadmap to the intricacies of deep value investing. Penned by an experienced investor with a lengthy and impressive history, it offers a unique insight into the techniques of identifying promising undervalued stocks ahead of the curve. Deep value investing entails uncovering truly undervalued companies with the potential for outstanding long-term returns.

This investing style represents a contrarian approach to investing that can yield substantial rewards for those with patience and a long-term investment perspective. However, it’s essential to keep in mind that success is not guaranteed, and deep value investing may pose emotional challenges on certain occasions.

Common stocks and uncommon profits and other writings

Philip Arthur Fisher, whose remarkable achievements few investors have eclipsed, imparts in this book the wisdom of prudent investing and the creation of a resilient, timeless investment philosophy that paves the way for a serene and secure financial future. Fisher’s investment approach can be distilled into a simple maxim: acquire and maintain, over the long haul, a focused selection of exceptional companies with compelling growth potential, thoroughly comprehended.

Within the book, critical inquiries that investors should contemplate in their pursuit of high-potential growth opportunities are explored and systematically addressed.

100 to 1 in the stock market

This book serves as an examination of “100-baggers”, extracting valuable insights to uncover their shared attributes and spot these opportunities in their infancy. Thomas Phelps’ book provides a guide to accumulating substantial wealth through enduring investments. Phelps outlines his approach for identifying and investing in “compounding machines,” which are enterprises capable of delivering impressive long-term returns. The author emphasizes the wisdom of acquiring quality companies at reasonable prices and retaining them for the extended term.

Phelps’s strategy centres on the principle of compound interest, wherein the accrual of interest on interest leads to exponential growth. He contends that by investing in companies with high returns on invested capital (ROIC), investors can harness the potential of compound interest to attain remarkable wealth accumulation.

Excess Returns: A comparative study of the methods of the world’s greatest investors

In Frederik Vanhaverbeke’s book, he dissects the investment principles and strategies employed by a cadre of the world’s most triumphant investors, including luminaries such as Warren Buffett, Benjamin Graham, Anthony Bolton, Peter Lynch, Charles Munger, Joel Greenblatt, Seth Klarman, David Einhorn, Daniel Loeb, Lou Simpson, and Prem Watsa.

The book takes a foundational stance that outperforming the market is attainable and proceeds to embark on an exploration of how these renowned investors consistently achieved exceptional results, often by substantial margins. Employing meticulous scrutiny, the author delves into the content of numerous books, articles, letters, and speeches delivered by numerous top investors over the past century, culminating in a comprehensive blueprint detailing the precise methods employed by these investment legends in their craft.

Vanhaverbeke contends that there are recurring principles inherent in the investment strategies of these accomplished investors. These principles encompass:

Emphasis on value: Prosperous investors seek out companies whose market prices are substantially below their intrinsic worth.

Extended investment horizon: Triumph comes to those investors who demonstrate patience and a readiness to retain their holdings over the long haul.

Methodical methodology: Effective investors adhere to a disciplined investment approach, guarding against emotional interference in their decision-making.

Against the Gods: The remarkable story of risk

Peter L. Bernstein’s non-fiction work delves into the history and progression of risk management. Bernstein contends that risk is not a novel concept but rather a timeless challenge faced by humans over the centuries. He traces the evolution of risk management from its origins in ancient civilizations to its contemporary applications in finance and insurance.

Given the constant surge in stock market performance, perplexing seasoned market analysts, and prompting revisions to their predictions, an examination of the notion of risk becomes particularly relevant. The author presents an all-encompassing chronicle of humanity’s quest to grasp risk and probability. This journey commences with ancient Greek gamblers, extends through the contributions of 17th-century French mathematicians Pascal and Fermat, and ventures into the realms of modern chaos theory. Throughout, Bernstein illustrates that comprehension of risk serves as the foundation for endeavours ranging from game theory to the construction of bridges and the craft of winemaking.

This book offers a captivating and enlightening read that elucidates the frequently misconstrued concept of risk. It remains an invaluable resource for those seeking a deeper understanding of risk and its influence on our lives.