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Buffett disciple Mohnish Pabrai names his favorite investing books


Are you looking to make long-term investments in stocks? Veteran investor Mohnish Pabrai has two books to recommend.

Speaking to CNBC Pro Talks, Pabrai — a value investor and disciple of billionaire Warren Buffett — said that “100 to 1 in the Stock Market“is a “extremely well written” book.

The book was originally published fifty years ago by Thomas Phelps. It teaches you how to grow your wealth 100 times through invest-and-hold investing.

Buy-and-holdThis passive strategy involves buying stocks and keeping them for a longer period, even when there is short-term volatility.

Pabrai Investment Funds was founded in 1999 and has since grown from $100,000 to $1.2million in revenues as of March 2013. The founder discussed his strategy on which products to purchase.

Christopher Mayer’s “Competitive advantage” or “ability to earn superior returns” book is also a good choice for people looking for this, he added.100 Baggers” – which talks about For every $1 they invested, companies returned $100

Are the returns on equity high? It can it prosper and grow without debt? … Can this business reinvest the high returns and equity back at high rates?

Mohnish Patroi

Pabrai Investment Funds was founded by the founder

He suggested that investors should ask themselves several questions.

Is there a high return on equity for the company? Is it able to grow and prosper with no debt? … Can this business reinvest the high returns and equity back at high rates?”

What to do if your company is a “homerun”

Pabrai used the following example to illustrate his point: Starbucks.

Their money is returned in 2 years when they open an American store. They get their money back within 12 to 15 month when they open stores in China,” he stated.

The veteran investor stated that these are “astronomical returns of capital” and added that Starbucks could “get their money back very quickly.”

Because most of us aren’t going to Starbucks, the business is becoming more efficient. You pre-order and then you can pick your latte. Even better, it’s more lucrative [for them].”

Pabrai summed up his idea of a “homerun” – he said it’s being able to see a clear “10-, 20-, 30-year runway.”

“I’m trying say that I can find businesses where they grow and without any restrictions.
If you can use debt, but at an affordable price, you’ve got yourself a hit.

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