Hello friend, in today’s article we see how much it cost to buy an existing business from the book ” The Dhandho Investor” chapter 6 by author Mohnish Pabrai. In this chapter, the author explains that it’s better to buy an existing business than the Starting a new business.
so let’s understand the logic behind this
In this chapter, the author explains that buying an existing business with the help of the stock market is way better than starting your own business. if you want to start a Value Investor career, then this chapter will change your life perspective to starting a business.
so let’s start with the author’s words,
the authors say, ” There are a plethora of asset classes you would choose to invest in – CDs U.S. Treasuries, Bonds, Stocks, Real estate, private businesses, gold, silver platinum, oil furniture. the list is endless.
If you examine returns from the Board of Stock Market indexes over the past one hundred years, it is pretty clear that stocks do better than virtually all other easily accessible asset classes.
the evidence overwhelmingly suggests that over the long haul, the best place to invest assets is in common stocks, let’s investigate this particular creation of mankind called the stock market.
The first stock market was formed in just 1790 in Philadelphia, followed by the new york stock exchange in 1972. A stock is seen by many as a cryptic piece of paper whose price wiggles around continuously, that’s one way to look at stocks. (How much does it cost to Buy an Existing Business By Mohnish Pabrai)
A far better way, suggested by Benjamin Graham, is to think of them as an ownership stake in an existing business. Papa Patel’s Motel is not publically traded on any stock exchange. if it were and you bought some of it, Now you and papa Patel are partners.”
then the author gives the Six big advantages of Stocks to buy the existing business that is traded on an exchange.
the author says, ” There are six big advantages that the stock market offers versus the buying and selling of an entire business.
ultra-low frictional costs are a huge business is the best path to building wealth. And with no heavy lifting required, bargain buying opportunities, ultra-low capital requirement, ultra-low frictional costs, buying stakes in a few publically traded existing businesses is the no-brainer Dhandho way to go.”
so you get the idea, the best way to make money or multiply money is to buy the existing business with a simple model with the help of the stock market.
so in the next chapter, we see which business we should invest in.
so this is all about how much does to buy a business existing business, from the book ” the dhandho Investor ” chapter 6
buy this book to learn more about value investing.
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