matjone

I think I remember reading that "400% man" article when someone posted it on here a while back, and there was a quote from him that he was looking for new investors.

I am probably too small a fry for them to consider anyway. Kind of funny that the government is trying to keep me from losing money by not letting me invest with this guy. If they really wanted to help me they'd make a rule against me investing my money. :) Seriously, I always thought that was a stupid rule. Because you have a million dollars you must know something about investing? They ought to give you a test. Or , even more radically, stay out of it and let people make their own decisions.

Thanks. I assume that small investors still can't invest in Arlington? Their website won't load.

Oddball, if you don't mind discussing it I'd like to know a little bit more about how you operate. What size positions do you usually have, or how many stocks do you usually hold? Do you invest strictly in stocks? Do you always stay fully invested? Do you tend to invest more in quality companies that earn higher returns on equity, or do you buy mostly average to below average stuff? Do you usually try to invest around BV or lower, like Walter Schloss did? Hopefully you don't mind me asking you about this. I am always interested in hearing how smaller investors have beaten the market, and I imagine there are others on here that would be interested as well. Thanks,

Haven't unit sales on cigarettes been going down since all this negative attention started, especially for younger people? I thought this was the case. Not that it put them in the red or even came close to doing so. If coke consumption does go down I imagine it will take a long time. But if kids are sitting there getting it pounded into their heads how bad it is it could have an effect down the road. Who knows, maybe they'll keep drinking it to be rebels. Even if it does slowly decline I imagine coke can keep raising prices for quite a while to counteract it. As far as other companies taking market share from coke, I'd bet quite a bit that that won't happen. I know they won't win me over. I think coke tastes better, plus it makes me handsome and healthy and increases my chances with the ladies.

Yeah, if I remember right I once saw an article where an Aldi's manager had said they had found that they did better selling colgate toothpaste than with a cheaper variety. I imagine its the same way with coke and a few other brands that people really like. But my understanding is that their strategy is to sell their private label brand on most product categories.

Thanks for posting this. Would be interesting to hear them go through their reasoning on some more of their past and present holdings. I wonder how much coke consumption will grow in the long run, given the obesity problem and the amount of focus there is now on living healthier. There seems to be a big push to educate kids about looking after their health, way beyond what they did in health class when I was growing up. That being said, on the rare instances I do feel like a coke I'd probably pay triple whatever they're charging for pepsi. I'm actually kind of skeptical whether the power of brands in general will be what it was in the last half century or so. I am sure some will do well, but going forward I wonder about the business of just stuffing some corn and soy into a shiny package and advertising the hell out of it. When I go to Aldi there are hardly any major brands and no one seems to care, and I wonder how much wal mart's traffic would go down if they did the same.

Don't HELOC's have adjustable rates? I always thought that was the case which kept me from ever looking too much into them.

Say there's a big economic collapse and the market goes down 90% and unemployment goes to 20% or whatever. You lose your job, your portfolio is way down, and businesses are failing left and right. If you can weather this and still easily meet the payments then something like this might make sense. The only other time I can see doing something like this is if you saw a bond selling below par with a really safe coupon that covered the interest payments, and I'd want to be damn sure that the issuer could easily make the coupon payments under the worst case scenario. I mean it would have to be like proctor and gamble type safety. In other words, it's probably never gonna happen. I do agree that berkshire is probably safer than most investments over 30 years but you have to be sure you make it through those 30 years. In the meantime you don't control the cash flows that berkshire has coming in and you have to make the payments. And what looks like stable income could disappear during a depression.

I don't know much about insurance. I know a lot of people here do, so I have a question: Is it possible for a great investor who understands insurance to come close to doing what Buffett did? Could a Buffett clone even do it if he were starting out today? It seems simple - lever up, buy the safest and strongest businesses you can find, and don't chase after unprofitable insurance business. But I wonder if the insurance industry has changed or gotten competitive so that it isn't possible anymore.

I certainly didn't mean to leave the impression that I considered Graham to be some guy who mindlessly followed a formula because he was obviously a lot more than that. He called for a lot of in depth analysis in Security Analysis, but by the end of his life he had changed his tune a little bit. Take a look at this interview. http://www.sdeklerck.be/wp-content/uploads/2012/05/An-hour-with-Mr.-Graham2.pdf I agree that the Forbes 400 will always be dominated by people who had a spectacular success owning one company. But I think you would also agree that Schloss would have gotten plenty rich with his method even if he had never started his own firm.

I like Stockscreen123 because it allows you to make your own rules using data straight off of financial statements. It is the only screener I've seen that allows you to build a net-net screen. But it doesn't have many overseas stocks in the database. I use the financial times screener for those.

Thanks for that link. I have added you to my already too long list of feeds on google reader. And please don't take offense about what I said about your article. I didn't mean to say that you had actually recommended going all in on those 4 stocks. I was just using it as an example for argument's sake.

Thanks for posting this, looks like a good place to check for ideas. I have seen a lot of backtests that validate the Graham method. But it means more to me to see people who have done it with real money. It's easy to look at an investing strategy and think "I am going to set something like this up and just sit back and let the returns happen." There are a lot of things you don't think about when you look at a backtest. Are the stocks liquid enough that the returns would have been possible? And would you have really followed it even if it was possible? To achieve the results that are mentioned in this article you would have had to go all in on 4 stocks in fall '08 when all hell was breaking loose. Not all in on PG and WMT either, but in stuff like Methanex (MEOH). I can't see myself doing that. If anyone else on here has a decade or so experience with a diversified statistical approach like Graham advocated I would like to hear about your experience with it.

this information indicates that walter schloss performance for the period 1984-2001 was just as spectacular as his performance for the period 1956-1984 "Walter Schloss continued to outperform the market until his retirement in 2002 posting a cumulative return of 16 percent annualized (21 percent before fees) versus an annualized return of 10 percent for the S&P 500 over the course of his career." zippy1, thanks for sharing a few more pieces of the puzzle, only 12 years missing now...... anybody who has any annual performance info for the period 1989-2001, please share........ regards rijk http://www.rationalwalk.com/?p=13008&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheRationalWalkFeed+%28The+Rational+Walk%29 I am glad there are others interested in Walter Schloss' performance during the last part of his career. I saw a talk that Munger gave where he said the Ben Graham way doesn't work anymore, and that now you have to be a super smart businessman to get rich investing. When I first read this I was kind of bummed out. I had been sitting there thinking that I was going to get rich using the Ben Graham method and now I was wondering if it was still possible. I doubt I'm ever going to be half as smart as Munger/Buffett are about business. But if what you guys are saying is correct it looks like the old way still works, or at least it did till 2002. I haven't seen Schloss' '89-'02 figures anywhere but if my math is right and the figures you guys have dug up are correct then it looks like he would have had to have done about 19.5% from '89-'02 to get 21% for his career.

Thanks for posting. He is saying that investing for the long run may not work for the next few years because p/e ratios might go down and the earnings might not go up much because of low growth. He could turn out to be right, but can anyone actually predict these things? I guess some really smart people might be able to look at fundamentals and forecast economic growth, and I am skeptical of that, but what I am even more skeptical of is his reasoning for forecasting pe compression, which is that since bear markets in the past lasted 17 years and ended with a pe of 10, and this one started in 2000 and we are at a pe of 16 now, then pe's are going to be about 40% lower in 2017. Even if he does turn out to be right, I think good value investors are going to do ok. Obviously they do better when earnings are growing and multiples are going up. But if they are really good they may find companies where one or both of those conditions are still true, even if they aren't for the overall market.

Thanks for posting these guys. I would also be interested in seeing his numbers from '85-'01. Something I have been trying to figure out since I started getting interested in this stuff is whether the Walter Schloss/ Ben Graham way of running a more diversified portfolio would still work. A lot of value investors seem to believe that the only way to beat the market by a signicant amount now is to run a concentrated portfolio. And Buffett said has said he believed the last good time to be a Ben Graham type investor was around 1970 or somewhere around then.

I decided that I needed to read it and if I remember right I read somewhere that Buffett thought the 2nd one was the best. Who knows if he ever actually said that. Anyway, I read it but I always wanted to read the 3rd because if I heard it has more information about the strategies he used at Graham Newman, particularly arbitrage. My library didn't have the 3rd edition so i got the 4th instead. It was not as good as the 2nd in my opinion. I got the feeling that Graham had played a smaller role in the writing of it - they were getting a little more intricate with their formulas than I think Graham would have messed with. Did you ever read any others? I am wondering how it compares. Which one are you calling the last one?

I am with Charlie Munger on gold. There seems to be no way to value the stuff so there can't be any MOS to it. The only reason to buy it seems to be if you think there's a good possibility of total chaos coming. If that is the case I would think you'd want the actual bricks in a safe deposit box or buried in the backyard depending on how crazy you think it's gonna get. I can see the arguments for carrying a few bars to bribe people for when things get totally crazy, but when you start putting any substantial portion like 10% of your money in something that at best is going to match inflation in the long run you, then you are going to end up substantially poorer if you keep this allocation throughout your lifetime. And if you plan to only keep this allocation only when there is a lot of panic and then get out of it when the reason for the panic is over,it seems like you are guaranteed to lose money. If I really wanted a claim on some gold I think I'd rather do it through part ownership of a pawn shop.

Actually I do have most of it in equities, but I still try to follow Graham's allocation rule. It seems like most of the disciples of Graham disregarded this rule. I might someday too. I know that equities have the edge over the long haul, and if they made a rule that I had to keep the money in whatever fund I picked for 10 years I'd put it all in stocks. But for right now I am following the philosophy that I'm not smart or experienced enough to disagree with Ben Graham. It is nice to have money lying around when the market starts crashing too.

In keeping with Ben Graham rule, I try to keep some of my money in equities and some in bonds, and right now for the bond category I stick to short term treasuries. Problem is, there is no treasury fund in my 401(k). My options are PIMCO total return, which invests in intermediate term bonds and MBS, and Wells Fargo Stable Return, which invests in money market and Guaranteed Investment Contracts. Which would be the better choice? I am tempted to go with the stable return so that I don't have to worry about losing money if interest rates go up, but I know that money market funds aren't 100% safe.

I don't know if it is in any filings anywhere, but I've got a copy of "The Rediscovered Ben Graham" and I just went back and looked at a couple of articles in it. According to what I am reading he was out of Geico before it had all the problems. In fact in one interview from 1974 they revealed that he didn't invest in stocks at all anymore.

What is sad is that this is how people really work. I think I remember seeing a study someone did that showed that the average CEO of major corporations was well over 6'. Doesn't really make us look too evolved.

This would be interesting to see but I've never seen it done and don't have time to do it myself. I imagine it would probably be a good practice to get into for your own picks. This is one area where you can see that Ben Graham thought differently than Buffett. Buffett says to always look at what the business will earn 10 years out. But Graham seemed to be of the opinion that no one knew the future and that the way to invest was to buy with a MOS to guard against this uncertainty. I think that Buffett's way has less risk in it, but the trouble is that hardly anyone is smart enough to do it. What if you went back and found that Ben Graham's results would have been poor if he had held his picks for 10 years? Does that mean he wasn't a good investor?

well I guess that depends on the management and the assets. whether you think the management can use those assets to generate cash flows that, when discounted back to the present, are more than liquidation value. I also think you have to be careful using liquidation value when a lot of the asset value is stock holdings. For example, take a hypothetical technology holding company back in the height of the tech bubble that is selling for half the market value of its holdings - but of course those holdings have no established earning power and are selling at 100 times book. I haven't looked at loews' holdings to see if they look expensive but I would like to hear other opinions about that. Another thing that would scare me about loews is that a big part of their earnings come from diamond offshore, and those earnings could be reduced quite a bit if the price of oil goes way down.