When it comes to learning from investors, there is a wide range of names that come to mind. You’ve probably heard of the legendary Warren Buffett, but did you know that even Buffett has his own list of favorite investors? One such investor he highly praised is Walter Schloss, and there are some valuable lessons we can learn from him. So, let’s dive into three key lessons that can benefit us as investors.
Lesson 1: The marriage of simplicity and discipline
Let’s start by exploring Schloss’s straightforward yet powerful investing style. He had a knack for identifying undervalued stocks, seeking out companies whose share prices were lower than their actual value. Schloss didn’t complicate things with timing the market or worrying about external factors like the day of the week or the time of year. Instead, he simply focused on finding businesses that he could buy at a significant discount to their true worth. And he did this consistently, repeating the process over and over again.
Now, what sets Schloss apart is his unwavering discipline. As investors, we often find ourselves distracted by the latest trends or trying to be overly clever. But mistakes tend to happen when we deviate from what we know best. Schloss understood this and remained true to his approach, relentlessly pursuing companies trading below their book value. It’s this discipline that transformed his simple strategy into an effective one.
Lesson 2: The long-term view
Like any successful investor, Schloss had his eyes firmly fixed on the long term. However, he took it a step further. Unlike those who burn the midnight oil or work tirelessly on weekends, Schloss designed his investment approach to be sustainable over decades. He achieved this by diversifying his holdings extensively, often holding a portfolio of at least 60 companies simultaneously. This was in contrast to Buffett, who concentrated his capital in a select few. Schloss believed in diversification as it provided him with peace of mind and allowed him to sleep well at night.
Schloss’s commitment to maintaining a work-life balance is a crucial lesson that often gets overlooked. It raises an important question: Is your investment style sustainable? It’s easy to get caught up in the excitement of investing, but we must ensure that our approach can stand the test of time. Schloss’s ability to confine his work hours from Monday to Friday, 9:00 am to 4:30 pm, emphasizes the significance of creating an investment strategy that aligns with our long-term goals and personal well-being.
Lesson 3: A confession
Before we wrap up, let me share a confession with you. The companies Schloss invested in may not align with the ones I would choose for myself. However, that doesn’t diminish the value of his wisdom. The truth is, we can learn something from every investor we encounter in our lifetime. While our investment styles may differ greatly, the lessons highlighted above resonate deeply with me.
It’s essential to remember that we don’t have to blindly follow everything our investing heroes do. Instead, we can draw inspiration from the insights of remarkable investors like Buffett and Schloss to craft an investment approach that suits our unique circumstances. By assimilating the right cues and adapting them to our own preferences, we can assemble a strategy that works best for us.
At The Smart Investor, we firmly believe in adopting a long-term investing approach that aligns with the lessons we’ve learned from exceptional investors like Walter Schloss. By combining simplicity with discipline and focusing on the long-term view, we can build a solid foundation for our investment journey.
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Disclosure: Joanna Sng does not own any of the companies mentioned.
