Admission Open: Value Investing Workshops – Offline (Bangalore & Chennai) &Online
Sunday offline Workshop (Bangalore &Chennai)
The Bangalore session is planned on 12th March. Sunday Chennai is on 19th March. I am accepting only 50 students for each of these sessions &first 25 can claim an bird discount that is early. Follow this link to learn more &join the workshop.2. Online Workshop.
Admissions may also be open for the March 2023 cohort of my value that is online workshop is investing. The workshop involves 26+ hours of pre-recorded, detailed lectures &Q&A sessions, plus 3-hour live online Q&A session scheduled on Sunday, 5th March 2023. I will be accepting only 50 students in this cohort &now significantly less than 20 seats remain. Click the link to learn more &join the
What if I told you that this investor
- Did not care about corporate earnings
- Rarely spoke to managements and analysts
- Did not watch the stock market during the day
- Never owned a computer, and
- Did not even go to college
you would not say anything but just ask me to reveal his name fast, 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 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 Super investors of Graham-And-Doddsville.
He doesn’t worry about whether it 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 if I told you. He simply says, if company is dollar that is worth I can purchase it for 40 cents, something good can happen if you ask me. And he does it over &over &over again. He owns a lot more stocks I don’t seem to have very much influence I do — &is far less interested in the underlying nature of the business on him than. That’s one of his true strengths; no body has influence that is significantly him
Now, After all, I would like to now disclose the name with this man, whom Buffett termed Super Investor in his famous essay, The Super investors of Graham-And-Doddsville.
The for those who have not read much about the world’s investors that are best-ever
Walter Schloss was an outlier among outliers &yet you’ve probably never heard about him if you haven’t already read below to find out who Name is Schloss…Walter Schloss
“Walter who?” you may wonder. Even i did son’t hear while I was in the process of discovering about value investing.
- Schloss about him until few years back Graduated school that is high 1934 throughout the Great Depression &got job being a “runner” at small brokerage firm. As being 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. Anyways, this was when World War II broke out and Schloss enlisted in the army for four years.
He, however, stayed in contact with Graham, which paid off when he got 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 do 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 start your work towards becoming a sensible, successful value investor.
Of course, Schloss had his stars extremely well-aligned in terms of getting to work alongside Graham and Buffett, but then remember that he started as just a ‘paperboy’ without a college degree, before working his way through investing stardom.
As a matter of fact, Schloss left Graham-Newman in 1955 and, with US$ 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 ever written about Schloss, despite the fact that his investment track record almost compares to Buffett’s and Graham’s?
Perhaps the reason is that Schloss’ investment philosophy was so simple that there isn’t much to say about it.
Schloss, as his friends including Buffett reveal, hated stress and tried to avoid it by keeping 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 keeping stress away while investing are two of the several big lessons that Schloss has to teach us investors.
When it comes to analyzing stocks/businesses, a lot of people get stressed trying to perfect their analyses, and thus work extremely hard to seek a lot of information, most of which is useless.
But as Schloss’ life and experience teaches, unless complexity can improve the explanation of something, it is better to proceed toward simpler theories.
While fund managers and other stock experts were breaking their heads with complex financial models and theories, Schloss stuck with the simple application of value investing that had been around for decades…at least since the time Graham was teaching. He multiplied his original capital 1,070 times over 47 years while handsomely beating the S&P 500 by simply comparing price to value.
Warren Buffett wrote this in his 2006 letter to shareholders…
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 thoughts and complex algorithms.
Another big lesson Schloss taught was the importance of paying right prices for stocks. He perfectly mastered Graham’s teaching that you must buy stocks like you buy groceries (you want them cheap), not the way you buy perfumes (expensive is better).
He also laid importance on buying good businesses when their stock prices fell from where he bought them the first time.
As he said in one of the very few conference speeches he gave…
…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 about the importance of independent thinking. When asked at the same conference that given the market sometimes knows more than the investors, how can one justify whether buying a falling stock would be a right decision or not, Schloss replied…
You have to use your judgment and have the guts to follow it through and 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 your own self and knowing our strengths and weaknesses was also what Schloss was great at.
He told this to 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 stuck to a strict set of rules when he was making his investment decisions, and invested purely on balance sheet analysis and valuation metrics that he knew and understood. Also, as I mentioned earlier, he never visited the company managements and if he couldn’t understand something, he would just stay away.
As a matter of fact, both these factors – not meeting managements and avoiding things I don’t understand – have also worked very well for me in my personal capacity as an investor.
Anyways, Schloss’ developed his investment wisdom through his closeness to Graham and Buffett and decades of practicing what really worked in the stock market.
But as a readymade guide for us, he put together a list of 16 timeless principles for becoming a better investor. These principles were published by Schloss on a one-page note in March 1994 titled – Factors needed to make money in the stock market.
Click here to download the original note, or click on the image below.
Overall, Schloss screened for companies ideally trading at discounts to book value, with no or low debt, and managements that owned enough company stock to make them want to do the right thing by shareholders.
If he liked what he saw, he bought a little and called the company for financial statements. He read these documents, paying special attention to footnotes.
One question he tried to answer from the numbers was: Was the management honest (meaning not overly greedy)
All this paid Schloss and his investors very well, especially because he stayed true to this philosophy for a long-long time.
Before I close, here is Buffett again on what Schloss was all about, as he wrote in his 1986 letter…
Tens of thousands of students (who were taught Efficient Market Theory) were therefore sent out into life believing that on every day the price of every stock was “right” (or, more accurately, not demonstrably wrong) and that attempts to evaluate businesses – that is, stocks – were useless. Walter meanwhile went on overperforming, his job made easier by the misguided instructions that had been given to those young minds. After all, if you are in the shipping business, it’s helpful to have all of your potential competitors be taught that the earth is flat.
Maybe it was a good thing for his investors that Walter didn’t go to college.
While it might be difficult to practice Schloss’ approach (especially of buying things very cheap) in the current times of most quality businesses lacking margin of safety, there still are many lessons that we can learn from this master of deep value approach to investing.
Schloss was truly a Super Investor, who deserved a greater limelight than he received.
But then, thanks to being in the shadows, he was and still must be sleeping peacefully.
He He bought them the very first time.()As he said in just one of ab muscles few ()conference speeches() he gave……you need to have stomach &be ready to take an loss that is unrealized that you must buy stocks also laid importance on buying good businesses when their stock prices fell() from where. 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 that is continuing()Schloss also stressed in regards to the importance of independent thinking. When asked through the conference that is same given the marketplace sometimes knows a lot more than the investors, how can I justify whether buying falling stock will be right decision or otherwise not, Schloss replied…
You need to use your judgment &have the guts to adhere to it through &the undeniable fact that the marketplace does not you are wrong like it doesn’t mean. But, again, everybody has to make their judgments that are own this. And that’s why is the stock exchange very interesting you what’s going to happen later.()Staying Because he thought the figures told the story because they don’t tell true to your own self &knowing our strengths &weaknesses() was also what Schloss was great at.()He told this to students at a ()lecture in Columbia Business School() in 1993…()Ben Graham did visit that is n’t. Peter Lynch visited literally signifigant amounts of companies &did superb job in his picking. I never felt that individuals could continue this kind or type of work &would either have to quit after few years or I’d be dead.()I didn’t like the alternatives &therefore, went with more approach that is investing that is passive might never be as profitable however if practiced long enough will enable the compounding to offset the fellow who had been simply playing around visiting managements.
I Also liked the idea that is basic of number of stocks. Warren Buffett is happy with owning stocks that are few is right if he’s Warren nevertheless when you aren’t, you should do it the way in which’s comfortable i love to sleep nights.()Revisiting That he knew &understood for you Schloss’ Legacy()Schloss stuck to set that is strict of when he was making his investment decisions &invested purely on balance sheet analysis &valuation metrics. Also, as I mentioned earlier, he never visited the company managements &if he couldn’t understand something, he would just stay away.()As matter of fact, both these factors – not managements that are meeting things I don’t understand – also have worked very well for me personally within my capacity that is personal as investor.
Anyways, Schloss’ developed his investment wisdom through his closeness to Graham &Buffett &decades of practicing what really worked to the stock market.()But as readymade guide he come up with range of 16 principles that are timeless becoming better investor for us. These principles were published by Schloss on one-page note in March 1994 titled – Factors needed to make money in the stock market.()Click here to download the note( that is original, or go through the image below.
The following is summary of Schloss’ investment approach them might like to do the best thing by shareholders.()If he liked what he saw, he bought little &called the business for financial statements as he practiced over 47 long years…(*)Source: The American Association of Individual Investors; * ‘Campbell Soup Companies’ meant individuals with long history &that Schloss considered stable &well known()Overall, Schloss screened for companies ideally trading at discounts to book value, without any or low debt &managements that owned enough company stock in order to make. He read these documents, attending to that is special footnotes.()One Question he attempted to answer through the numbers that are true: Was the management honest (meaning not overly greedy)?
All this paid Schloss &his investors very well, especially because he stayed true for this philosophy for long-long time.()Before I close, listed here is Buffett again about what Schloss was exactly about, as he wrote in his 1986 letter…()Tens of huge number of students (who have been taught Efficient Market Theory) were therefore sent out into life believing that on each and every day the buying price of every stock was “right” (or, more accurately, not demonstrably wrong) &that tries to evaluate businesses – that is, stocks – were useless. Walter meanwhile went on overperforming, his job made easier by the instructions that are misguided were provided to those minds which can be young. All things considered, that we can learn from this master of deep value approach to investing.
Schloss while it might be difficult to practice Schloss’ approach (especially of buying things very cheap) in the current times of most quality businesses lacking margin of safety, there still are many lessons Then, because of being into the shadows, he had been &still should be sleeping peacefully. More on Walter Schloss:( if you are in the shipping business, it’s helpful to have all of your potential competitors be taught that the earth is flat.()Maybe it was good thing for his investors that Walter didn’t go to college Was truly Super Investor, who deserved greater limelight than.()But was received by him)