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Jose Vasquez
Jose Vasquez
Articles (13)  | Author's Website |

Walter Schloss: The Essence of Value Investing

July 07, 2011

About the author:

Jose Vasquez
I was born in Spain and lived in France, Chile, USA and Belgium. I used to work in IT and Banking. I am a family man, I have a lovely wife, 3 sons and one step daughter. I have humble tastes, I like to stay home and read about companies. I started investing before the internet bubble. I knew little and liked technical analysis so my results were bad. Fortunately I did not have much to lose. Some years later in 2006, bored of doing real state investments, I opened an interactive brokers account and restarted. This time, not wanting to make mistakes, I decided to follow a model: Warren Buffett, he was at good making money via stocks. So I started reading about him, his shareholders letters, the books that he recommended, etc... I started applying his principles, reading 10K's digesting all sources of information. I started buying good and cheap companies to hold forever unless something changed fundamentally. When the housing crisis started I was 75% cash. By then I had identified good companies at very cheap prices so I invested most of my savings in stocks. It doubled fast. By the second semester of 2009 I turned my software company into an investment vehicle and dedicated myself full time to it. I changed lifestyle and moved from Belgium to the beach, Brazil, north east coast (www.kuchita.com). The goal was to keep fixed costs low in order to be able to live with a minimum 6-8% yearly return, to move away from the inhuman life of civilization and to have some peace and sunny weather. Now I can think and study about companies 60 hours/week. I can finally do what I want full time and can say that I have never been so happy, specially also with my just born 4th son, my other great kids and my sweet wife who supports me fully while I study most of the day and patiently wait for the opportunity to make a swing ! My portfolio is disclosed here: http://www.kuchita.com/view/sumo.php For more:

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Rating: 4.7/5 (101 votes)

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Comments

warner13
Warner13 - 8 years ago    Report SPAM
Good article. Thanks for posting it
Jose Vasquez
Jose Vasquez - 8 years ago    Report SPAM
Thanks for your appreciation warner13, Schloss is indeed an admirable person, I must admit that I have almost never bought a company under book fitting his criteria, but I have seen some very interesting companies in Japan that are in that situation, I just do not feel comfortable enough because it is hard to find enough info about them and I tend to want to know a lot about the company before investing, but I have been thinking about buying several, as a package, mainly based on their financial statements, and in order to diversify the risk.
David Chulak
David Chulak premium member - 8 years ago
First, that was a great post. You articulated exactly my feelings when it comes to following his methodology. I've not tried it, nor do I feel comfortable....but someday....Thanks.
Jose Vasquez
Jose Vasquez - 8 years ago    Report SPAM
“Basically we like to buy stocks which we feel are undervalued, and then we have to have the guts to buy more when they go down,” Schloss said at a 1998 conference sponsored by Grant’s Interest Rate Observer. “And that’s really the history of Ben Graham.”

Edwin Schloss said he figured his father’s investing philosophy and longevity were related: “A lot of money managers today worry about quarterly comparisons in earnings. They’re up biting their fingernails until 5 in the morning. My dad never worried about quarterly comparisons. He slept well.”

Walter Schloss died yesterday.

Rest in peace !

Juan
Cornelius Chan
Cornelius Chan - 8 years ago    Report SPAM
Thank you very much for locating the info and posting such an article. I had never heard of Walter Schloss before now. It seems buy and hold does indeed work using the strategies he used. A thousand stocks is a heck of a lot of positions to hold. His investment returns speaks for itself, "success requires no explanation..." Did he never go on holiday or enjoy his money?

My mentor told me it takes 1/3rd skill to buy stocks and it takes 2/3rd's skill to sell stocks and book profit. Perhaps that is why Walter only has 1 tip for selling -- see the 9th factor -- out of 16 factors of value investing.

May he rest in peace.

CWR

augustabound
Augustabound - 8 years ago    Report SPAM
I looked at Bassett after reading this article, Walter Schloss made it look so easy. :)

Has he ever spoken to the Amazon and Yahoo! shorts? I know it's a part of the stock list he sent to WEB, but is it simply a matter of little in tangible assets and maybe more obvious, a sky high P/E?

Great article Juan.
Jose Vasquez
Jose Vasquez - 8 years ago    Report SPAM
Hi Augustaound, thanks!

He made money shorting stocks during the internet bubble, specially yahoo, I think it represented exactly the opposite of what he looked for: famous company with sky-high p/e and multiple times book value. I guess that from decades of experience it was bound for a correction and he bet on that.

Cheers!

Juan
augustabound
Augustabound - 8 years ago    Report SPAM
I was a bit surprised to see in his memo to WEB about his holdings that he shorted 3 stocks but like the ultimate value investor, he saw a fat pitch and swung. Based on the timeline and his track record, I'm sure he did very well with those few shorts.

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