Friday, May 30, 2008


You'll note that for this value investor description, I use only one name. It's not because this investor is trying to make headlines with a one-name moniker like Madonna or Cher. Rather, I'm trying to do a 2 in 1 here, by covering both Walter and Edwin Schloss. Walter is yet another successful value investor who trained under Ben Graham. Edwin joined his father Walter's partnership in the 70s.

Walter and Edwin practice a brand of value investing that's very basic to grasp. They look for cheap stocks, and sell them when their value has been realized. No hedging, no bonds, no convertibles, no indexes...nothing complex. Yet following this simple strategy, they have been able to beat the S&P by about 4% per year for over 50 years. Four percent may not sound like much, but over that time period it would turn $1 into $662 as opposed to $118...big difference!

There are a few neat things about how the Schloss' operate. First, they don't charge a fee for assets under management. They only get paid off of the profits they make for their clients. I love it!

Second, they don't disclose to their clients as to what stocks they own. The knowledge of the stocks they own can sometimes strike fear and uneasiness in their clients and they would rather do without!

Third, the way they find their stocks is by looking at what's been beaten down. They like stocks that have disappointed other investors who have then gone on to punish the stock. Then, they are interested in the replacement value of the assets. If the assets are selling on the cheap, good things will happen.


Anonymous said...


Do you have any recent examples of stocks that the Schloss fatehr and son partnership have purchased?
Where did you get your information about their performance?


Saj Karsan said...

Hi Online,

I don't have any recent picks of theirs, sorry. I found most of the performance info in this book. I highly recommend it!