There are a great many investors you can learn from.
A popular name would be Warren Buffett. But Buffett has his own list of favourite investors.
In 1984, the Oracle of Omaha highlighted the work of Walter Schloss in his speech titled “The Superinvestors of Graham and Doddsville”.
There is much we can learn from Schloss.
With that in mind, I would like to highlight three lessons.
The marriage of simplicity and discipline
“He knows how to identify securities that sell at considerably less than their value to a private owner. And that’s all he does.
He doesn’t worry about whether it is 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.”
– Warren Buffett
On the surface, Schloss’s investing style is not complicated.
He looked for unloved shares and sought a share price that was lower than the value of the company’s assets.
Schloss would also diversify his holdings and wait patiently for the results.
That’s all he did.
But there is more to his approach than just keeping it simple.
As Buffett noted, Schloss kept doing what he did over and over again.
In my view, it is Schloss’s discipline that turns his simple approach into an effective approach.
As an investor, we can get distracted.
At times, we are tempted to try ideas which are too smart for our own good.
In my experience, that’s when mistakes are made.
In this sense, Schloss simply pursued what he knows best – companies that trade below their book value – and proceeded to run his investment process over and over again.
The long term view
Like any good investor, Schloss was focused on the long term.
But Schloss took the idea one step further.
He wasn’t keen on working on weekends or burning the midnight oil.
Instead, he shaped his investment approach so that it would be a process that he could keep doing for decades.
Schloss diversified widely, holding at least 60 companies at a time, whereas Buffett would concentrate his capital around a handful of companies.
He felt comfortable with diversifying widely as it helped him sleep at night.
In the process, Schloss managed to keep his work hours between 9:00 am and 4:30pm from Monday to Friday.
Schloss’s approach speaks to a great long-term lesson few investors talk about. Simply said: is your investment style sustainable?
The Final Lesson: A confession
Before we leave this conversation, I have a confession to make.
The type of companies that the late Schloss would buy are almost never going to be the same companies that I would buy.
But if that’s the case, why would Schloss be one of my favourite investors?
In short, I believe that we can learn something from each investor we meet during our lifetimes.
My investment style may differ greatly from Schloss, but the lessons above resonate deeply with me.
We don’t have to follow everything that our investing heroes do.
Instead, it is up to us to take the right cues from the many investing greats before us, whether it is Buffett or Schloss, to assemble an investment approach that works best for ourselves.
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