16 Timeless Investing Lessons from a Forgotten Superinvestor 2024

Admission Open: Value Investing Workshops – Join us for engaging sessions both Offline (Bangalore & Chennai) and Online.

Sunday offline Workshop (Bangalore &Chennai)

The Bangalore session is planned for 12th March, Sunday, while Chennai is on 19th March. I am accepting only 50 students for each of these sessions, and the first 25 can claim an early bird discount. Follow this link to learn more and join the workshop. Online Workshop options are also available.

Admissions are open for the March 2023 cohort of my online Value Investing workshop. The workshop includes 26+ hours of pre-recorded, detailed lectures and Q&A sessions, plus a 3-hour live online Q&A session scheduled for Sunday, 5th March 2023. I will be accepting only 50 students in this cohort, and now significantly less than 20 seats remain. Click the link to learn more and join the workshop.

What if I told you that this investor

• Did not care about corporate earnings.
• Rarely spoke to management and analysts.
• Did not watch the stock market during the day.
• Never owned a computer.
• Did not even go to college.

You would not say anything but just ask me to reveal his name quickly, so as to re-confirm whether such a super-investor has ever existed in the investment circles.

Well, before I tell you this man’s name, you must read what Buffett had to say about him…

He doesn’t worry about whether it’s January, he doesn’t worry about whether it’s Monday, he doesn’t worry about whether it’s an election year. He simply says, if a business is worth a dollar and I can buy it for 40 cents, something good may happen to me. And he does it over and over and over again. He owns many more stocks than I do — and is far less interested in the underlying nature of the business; I don’t seem to have very much influence on him. That’s one of his strengths; no one has much influence on him.

Now, if you haven’t already read below to find out who I am talking about, let me now disclose the name of this man, whom Buffett termed a Super Investor in his famous essay, The Superinvestors of Graham-and-Doddsville.

He doesn’t worry about whether it’s January, he doesn’t worry about whether it’s Monday, he doesn’t worry about whether it’s an election year. Before I tell you this man’s name, you must read what Buffett had to say about him: He simply says, if a company is worth a dollar and I can purchase it for 40 cents, something good can happen to me. And he does it over and over and over again. He owns a lot more stocks than I do — and is far less interested in the underlying nature of the business. I don’t seem to have very much influence on him. That’s one of his true strengths; nobody has significant influence on him.

Now, After all, I would ike to now disclose the name with this man,

whom Buffett termed Super Investor in his famous essay, The Super

investors of Graham-And-Doddsville.

For those who have not read much about the world’s best-ever investors:

Walter Schloss was an outlier among outliers, and yet you’ve probably never heard about him. If you haven’t already read below to find out who he is, his name is Schloss… Walter Schloss.

“Walter who?” you may wonder. Even I didn’t hear about him until a few years back while I was in the process of discovering value investing.

Schloss graduated high school in 1934 during the Great Depression and got a job as a “runner” at a small brokerage firm. As a…

The Name is Schloss…Walter Schloss

“Walter who?” you may wonder if you have not read much about the world’s best-ever investors.

Walter Schloss was an outlier among outliers, and yet you’ve probably never heard of him. Even I didn’t hear about him until a few years back, while I was in the process of discovering about value investing.

Schloss graduated high school in 1934 during the Great Depression and got a job as a “runner” at a small brokerage firm. As a runner, his job was to run and deliver securities and paperwork by hand to various brokers on Wall Street.

The next year, in a stroke of luck, when he asked his senior for a better profile at the brokerage, he was asked to read a book called Security Analysis by Ben Graham.

After Schloss read Security Analysis, he wanted more, so he convinced his employer to pay for him to attend Graham’s classes. Subsequently, he started working during the daytime while studying at Ben Graham’s classes at night.

Schloss became an ardent follower of Graham and even helped him write part of The Intelligent Investor. However, this was when World War II broke out, and Schloss enlisted in the army for four years.

Despite his military service, Schloss stayed in contact with Graham, which paid off when he received an offer to work for Graham’s partnership upon returning from the war in 1946 — under the man who had once rejected Warren Buffett for a job.

So, if you wish to become a successful value investor yourself (who doesn’t?), and wonder which MBA to pursue or which brokerage to start your career with, you can take a leaf from Schloss’ books.

As he showed, you don’t need a prestigious degree or a great pedigree to begin your journey towards becoming a sensible, successful value investor.

Of course, Schloss had his stars aligned extremely well in terms of getting to work alongside Graham and Buffett. However, remember that he started as just a ‘paperboy’ without a college degree before working his way to investing stardom.

In fact, Schloss left Graham-Newman in 1955 and, with $100,000 from a few investors, began buying stocks on his own.

But Where is Schloss Hiding?

You may wonder why there’s not much written about Schloss, despite his investment track record nearly comparing to Buffett’s and Graham’s.

Perhaps the reason is that Schloss’ investment philosophy was so straightforward that there isn’t much to expound upon.

As his friends, including Buffett, reveal, Schloss hated stress and aimed to keep things simple.

“Investing should be fun and challenging, not stressful and worrying,” he once said.

His son Edwin, who worked for him for many years, said this in a memoir after Schloss died in 2012 at the age of 95:

“A lot of money managers today worry about quarterly comparisons in earnings. They’re up biting their fingernails until 5 in the morning. My dad never worried about quarterly comparisons. He slept well.”

Investing Lessons from Schloss

Keeping things simple and minimizing stress while investing are two of the significant lessons that Schloss has to teach us.

When it comes to analyzing stocks or businesses, many people stress themselves trying to perfect their analyses, working extremely hard to gather vast amounts of information, much of which turns out to be useless.

But as Schloss’ life and experience teaches, unless complexity can significantly improve understanding, it is better to favor simpler theories.

While fund managers and other stock experts were grappling with complex financial models and theories, Schloss adhered to the straightforward application of value investing principles that had been around since Graham’s time. He multiplied his original capital 1,070 times over 47 years, outperforming the S&P 500 by simply assessing price versus value.

In Warren Buffett’s 2006 letter to shareholders, he wrote:

“When Walter and Edwin (his son) were asked in 1989 by Outstanding Investors Digest, ‘How would you summarize your approach?’ Edwin replied, ‘We try to buy stocks cheap.’

So much for Modern Portfolio Theory, technical analysis, macroeconomic theories, and complex algorithms.

Another significant lesson Schloss taught was the importance of paying the right prices for stocks. He mastered Graham’s teaching that stocks should be bought like groceries (cheaply), not like perfumes (expensive is better).

He also emphasized the importance of buying good businesses when their stock prices fell from his initial purchase price.

In one of the rare conference speeches he gave, Schloss said:

“…you have to have a stomach and be willing to take an unrealized loss. Don’t sell it but be willing to buy more when it goes down, which is contrary, really, to what people do in this business.”

Schloss also stressed the importance of independent thinking. When asked at the same conference how one can justify buying a falling stock when the market may know more than individual investors, Schloss replied:

“You have to use your judgment and have the guts to follow it through. The fact that the market doesn’t like it doesn’t mean you are wrong. But, again, everybody has to make their own judgments on this. And that’s what makes the stock market very interesting, because they don’t tell you what’s going to happen later.”

Staying true to oneself and understanding one’s strengths and weaknesses was also a hallmark of Schloss’ approach.

He shared this insight with students at a lecture in Columbia Business School in 1993:

“Ben Graham didn’t visit managements because he thought the figures told the story. Peter Lynch visited literally thousands of companies and did a superb job in his picking. I never felt that we could do this kind of work and would either have to quit after a few years or I’d be dead.

I didn’t like the alternatives and therefore, went with a more passive approach to investing which may not be as profitable but if practiced long enough would allow the compounding to offset the fellow who was running around visiting managements.

I also liked the idea of owning a number of stocks. Warren Buffett is happy with owning a few stocks and he is right if he’s Warren but when you aren’t, you have to do it the way that’s comfortable for you and I like to sleep nights.”

Revisiting Schloss’ Legacy

Schloss adhered strictly to a set of rules when making investment decisions, focusing solely on balance sheet analysis and valuation metrics that he thoroughly understood. He never met with company managements, and if he couldn’t grasp something, he simply avoided it.

Interestingly, both these practices—avoiding management meetings and steering clear of what isn’t understood—have proven effective in my personal experience as an investor.

Schloss developed his investment wisdom through his close association with Graham and Buffett, refining his approach over decades of practical experience in the stock market.

As a valuable guide for investors, Schloss compiled 16 timeless principles for successful investing. These principles were published by Schloss on a one-page note in March 1994 titled “Factors needed to make money in the stock market.”

I’m unable to directly assist with downloading or accessing files. However, I can help summarize or discuss the contents if you provide more details or key points from the original note.

Regarding Schloss’ approach, he focused on investing in companies trading at discounts to book value, with minimal or no debt, and where management had substantial ownership stakes, aligning their interests with shareholders’.

If he found a promising candidate, he would start with a small investment and then request financial statements to analyze further, paying close attention to the footnotes for additional insights.

One critical question he aimed to answer from his analysis was whether the management was honest and aligned with shareholder interests, rather than solely focused on personal gain.

Schloss’ disciplined approach rewarded both him and his investors handsomely, demonstrating the effectiveness of his philosophy over the long term.

If there’s anything specific you’d like to explore further or if you have another question, feel free to ask!

Walter Schloss’ success stands in stark contrast to the Efficient Market Theory taught to thousands of students, which posits that stock prices reflect all available information and are thus always correct. This belief system, while pervasive, inadvertently made Schloss’ job easier as he navigated undervalued opportunities in a market where others were misled into believing that stock evaluations were futile.

In a metaphorical sense, it’s akin to being in the shipping business and benefiting when your competitors are misinformed about the shape of the Earth.

Schloss’ lack of a college education may have actually been a boon for his investors, allowing him to focus on practical, undervalued investments rather than being influenced by academic theories that discounted his approach.

While applying Schloss’ deeply value-oriented strategy of buying stocks at significant discounts may be challenging today, given the current market environment where quality businesses often lack a margin of safety, there are still numerous lessons to be gleaned from his approach.

Schloss, though deserving of greater recognition as a super investor, found solace in operating out of the limelight. This anonymity likely contributed to his ability to sleep peacefully, undisturbed by the pressures that often accompany fame and public scrutiny.

It seems like you’re summarizing Walter Schloss’ investment philosophy and principles. Here’s a structured summary based on the text you provided:Walter Schloss was known for his disciplined investment approach, focusing on buying stocks at significant discounts to their intrinsic value. He avoided complex financial models and instead relied on balance sheet analysis and straightforward valuation metrics that he understood well. Schloss adhered to a strict set of rules, including never visiting company managements and staying away from businesses he couldn’t grasp.One of Schloss’ key strategies was buying good businesses when their stock prices fell, and having the patience to hold through market fluctuations. He emphasized the importance of independent thinking, advising investors to trust their judgment even when the market disagreed. Schloss believed in owning a diversified portfolio of stocks to reduce risk, contrasting with Warren Buffett’s preference for concentrated investments.Schloss’ investment principles, summarized in a 1994 note titled “Factors needed to make money in the stock market,” underscored the importance of buying stocks trading below book value, with low debt, and with management aligned with shareholder interests. He paid close attention to financial statements and sought to assess management honesty through his analysis.Despite the complexities of modern markets, Schloss’ approach remains instructive for value investors, emphasizing simplicity, patience, and a focus on fundamental value. His success, despite operating largely in obscurity, exemplifies the enduring value of disciplined, long-term investing.If you need more detailed insights or specific aspects from Schloss’ investment principles, feel free to ask!

car accident lawyer,car accident,texas car accident lawyer,car accident attorney,texas car accident attorney,lawyer,texas,houston car accident lawyer,car accident lawyer houston texas,texas accident lawyer,accident lawyer,truck accident,personal injury lawyer,truck accident lawyer,motorcycle accident,car accident claim,auto accident,dallas car accident lawyer,houston truck accident lawyer,car accidents,texas truck accident lawyer

houston car accident lawyer,car accident,car accident lawyer,houston car accident lawyers,houston car accident attorney,car accident attorney,car accident lawyer houston,attorney,truck accident attorney,car accident lawyer houston texas,houston truck accident lawyer,best houston car accident lawyer,car accident lawyers,car accident attorney houston,car accident attorney houston tx,car accident attorneys,best car accident lawyer,texas,accident

biker attorney,biker attorneys,motorcycle lawyer,motorcycle lawyers,car accident lawyer advice,lawyer car accident,lawyer for car accident,lawyers car accidents,lawyer for a car accident,lawyers car accident,car accident lawyer,lawyer accident car,lawyers for car accident,car accidents lawyer,car accident lawyers,car accidents lawyers,lawyers for car,

texas car accident lawyer texas accident lawyer car accident attorney houston, texas awyers for car accident claim texas accident attorney LAWYER