Walter Schloss learned investing from Benjamin Graham, just like Buffett.
Buffett also mentioned Schloss in many letters and in his article on the Superinvestors of Graham and Doddsville.
Accordingly, Schloss followed a value investing philosophy.
There are only a handful of investors with high-teen performance over decades.
Walter Schloss is one of them.
He achieved a 20% annualized return over 47 years.
$10,000 would've turned into over $50 million.
Here's how he did that👇🏼
Walter Schloss learned investing from Benjamin Graham, just like Buffett.
Buffett also mentioned Schloss in many letters and in his article on the Superinvestors of Graham and Doddsville.
Accordingly, Schloss followed a value investing philosophy.
Today, we will analyze the most critical points and the things that differentiate Schloss.
In the end, there’ll also be an Investing Checklist by him and his son.
More important than the predictions of analysts or experts is your own judgment.
And it’s your responsibility to make sure it’s correct.
Most people fail to test their judgment and decisions regularly.
Being skeptical is much more helpful than trying to fit news into your thesis.
You shouldn’t need to convince yourself of an investment.
It should be convincing because of the facts.
This is a controversial topic for investors.
Many swear on talking to management to get an idea of how they think and behave.
Schloss rarely talked to management.
He didn’t trust his ability to judge character and therefore avoided these talks.
Because he didn't talk to management and invested in very cheap stocks, he focused on numbers.
His favorite metric was book value.
“Asset values fluctuate more slowly than earnings do.”
He preferably bought at 1/2 or 2/3 of book value.
Buffett and Munger think that diversification is a way to protect against ignorance.
And while many successful investors do have concentrated portfolios, there are exceptions.
Schloss is one of these exceptions.
Peter Lynch did something similar, although he held a lot more stocks.
Schloss kept it in a range of 60-100 stocks.
And he never had positions higher than 10% of the portfolio.
This worked because he focused on high probability bets with limited downside.
Schloss also believed you could not know an investment if you’re watching from the sidelines.
That’s why he established many small positions to observe them.
Over time, he averaged into these positions and built them up.
Once again, this is especially important when investing in unpopular businesses.
Through his investment strategy, he benefited from two simple principles.
1. Losses weigh more than gains.
If you lose 30%, you need to gain more than 30% to get back to zero.
Solution: Focus on the Downside
By buying and selling undervalued companies, he compounded faster than he would by buying great companies.
Of course, it’s more work to find many undervalued companies, but the higher frequency is very profitable.
Buffett used to do the same.
More from Daniel
Rakesh Jhunjhunwala is one of the most successful investors of all time.
He turned ~$100 into $5.8 billion and never managed outside money.
That's a 67% CAGR over 37 years
He never wrote a book, memos, or investing letters.
However, there are some interviews and transcripts👇
Here's a compiled PDF:
https://t.co/ypNv9QeUx9
If you have additional material, please let me know, and I'll update the PDF.
Follow the Substack for free to get all the Resources I read to learn more about investing.
He turned ~$100 into $5.8 billion and never managed outside money.
That's a 67% CAGR over 37 years
He never wrote a book, memos, or investing letters.
However, there are some interviews and transcripts👇
Here's a compiled PDF:
https://t.co/ypNv9QeUx9
If you have additional material, please let me know, and I'll update the PDF.
Follow the Substack for free to get all the Resources I read to learn more about investing.
More from All
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These are going to be very simple yet effective pure price action based scanners, no fancy indicators nothing - hope you liked it.
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One of the classic scanners very you will get strong stocks to Bet on.
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Hourly Breakout
This scanner will give you short term bet breakouts like hourly or 2Hr breakout
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