Walter Schloss

# Walter Schloss **Walter Schloss** (1916-2012) was a legendary value investor and one of Benjamin Graham's most successful disciples. He operated his own partnership for nearly 50 years, achieving extraordinary returns through a simple, disciplined approach. ## The Graham Connection Schloss worked at Graham-Newman Corp. from 1946 to 1955, learning value investing directly from Benjamin Graham. He absorbed Graham's principles and applied them with remarkable consistency for the rest of his career. > "Walter Schloss did not have a college degree. He didn't need one. He had Graham's principles and the discipline to apply them." After Graham retired, Schloss started his own partnership in 1955. He would manage money for the next 49 years, compounding capital at approximately 20% annually after fees. ## The Schloss Method Schloss's approach was remarkably simple: 1. **Buy at a discount to book value** — He sought stocks trading below working capital or book value 2. **Diversify widely** — He typically held 100 or more stocks 3. **Sell at fair value** — He sold when stocks reached his estimate of intrinsic value 4. **Avoid leverage** — He never used debt 5. **Keep costs low** — He worked alone, with minimal overhead This approach differed from Buffett's. While Buffett evolved to focus on quality and concentration, Schloss remained true to Graham's original "cigar butt" method. And it worked: his returns rivaled Buffett's over the same period. ## The Record From 1955 to 2002, Schloss's partnership earned approximately 20% annually after fees, compared to about 10% for the S&P 500. This was achieved with: - No leverage - No short selling - No complex derivatives - No assistance (he worked alone) - Minimal trading The record demonstrates that simple, disciplined value investing can produce extraordinary results. ## The Contrast with Buffett Schloss and Buffett represent two different approaches to value investing: **Buffett's approach**: - Focus on quality - Concentrate in best ideas - Pay fair price for wonderful businesses - Hold indefinitely **Schloss's approach**: - Focus on price - Diversify widely - Buy cheap regardless of quality - Sell at fair value Both approaches work. The key is consistency. Schloss never deviated from his method, and the results speak for themselves. ## The Legacy Walter Schloss retired in 2002 at age 86. His son Edwin continues to manage money using the same principles. Schloss demonstrated that you don't need brilliance, complexity, or leverage to achieve outstanding investment results. You need sound principles, discipline, and patience. His career is an inspiration to value investors everywhere.