Martha Stewart’s prison sentence clobbered that stock For example, Tyco’s stock collapsed when the Dennis Kozlowski scandal was front and center. Many of these news clips reflect negative news about a certain business or industry. If you read the business headlines on a daily basis, you’ll find plenty of stories about publicly traded businesses.How do we get a list of distressed businesses or industries? There are many sources, but here are six to begin with:.Markets aren’t fully efficient because humans control its auction-driven pricing mechanism It is this critical gap that is responsible for Mr. However, there is a huge difference between mostly and fully efficient. Trying to figure out the variance between prices and underlying intrinsic value, for most businesses, is usually a waste of time. IT’S BETTER TO BE A COPYCAT THAN AN INNOVATOR.LOOK FOR LOW-RISK, HIGH-UNCERTAINTY BUSINESSES.BUY BUSINESSES AT BIG DISCOUNTS TO THEIR UNDERLYING INTRINSIC VALUE.It is these nine principles that constitute the Dhandho framework:īUY SIMPLE BUSINESSES IN INDUSTRIES WITH AN ULTRA-SLOW RATE OF CHANGEīUY DISTRESSED BUSINESSES IN DISTRESSED INDUSTRIESīUY BUSINESSES WITH A DURABLE COMPETITIVE ADVANTAGE-THE MOATīET HEAVILY WHEN THE ODDS ARE OVERWHELMINGLY IN YOUR FAVOR These are my notes which I intend to go back to later. It is not a complete summary of the book. Later I turn those highlights into a blogpost. Note: While reading a book whenever I come across something interesting, I highlight it on my Kindle.
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