Walter Schloss Value Investing Principles

I found this awesome nugget of rich investment advice written by Walter Schloss (1916-2012). Walter Schloss was one of the greatest investor and is a pure product of the Benjamin Graham School of value investing. The file below resumes in point form his approach to investing. It’s simple, clean, and straight forward. Follow these rules and your returns should be fine. Or at least you will minimize the chance of losing money since its focus on already highly depressed stocks.

Warren Buffett, friend of Mr. Schloss, had this to say about him:

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 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 Walter. That is one of his strengths; no one has much influence on him. Source: The Superinvestors of Graham-and-Doddsville.

Buffett also said this in Adam Smith’s book Supermoney:

“He has no connections or access to useful information. Practically no one in Wall Street knows him and he is not fed any ideas. He looks up the numbers in the manuals and sends for the annual reports, and that’s about it.In introducing me to (Schloss) Warren had also, to my mind, described himself. ‘He never forgets that he is handling other people’s money, and this reinforces his normal strong aversion to loss.’ He has total integrity and a realistic picture of himself. Money is real to him and stocks are real – and from this flows an attraction to the ‘margin of safety’ principle.”

Again, it’s one of these things that are simple and easy to understand but extremely hard to do because of psychology and emotions. Walter bought some of the most hated and ugliest companies. You need some solid guts to make these decisions. If it was this easy, everybody would be making money. I will eventually have to write and expand on that one day.

Walter Schloss Investing Principles


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