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Schloss interview


MrB
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  • 7 months later...

attached is an attempt to visualize walter schloss performance (based on the superinvestors of graham and doddsville data), please note that i am using overall partnership results (i.e. excluding 25% performance fees) in order to purely reflect walter schloss performance....

 

my understanding is that schloss paid out the bulk of the annual gains to his partners each year, so in reality, the absolute value of funds invested would not be what is represented in the graphs, however for investors that reinvested 100% of their gains each year, i believe that the comparisons would still be valid....

 

i split the 29 year period (1956-1984) graph into three decades,... both the magnitude of outperformance and the stability of performance is remarkable, if this information was not coming from buffett there would be doubts about the quality of the data (at least in my mind)......

 

the performance during the last decade (1974-1984) is utterly amazing, walter schloss completely "destroyed" the s&p performance of 13% by generating a 35% annualized return during this decade.......

 

i am trying to complete these graphs with 1985-2001 performance figures, despite numerous attempts, i have not been able to obtain annual performance information for this period, if anybody has any information that could help, please share!

 

regards

rijk

 

Schloss_performance.xlsx

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attached is an attempt to visualize walter schloss performance (based on the superinvestors of graham and doddsville data), please note that i am using overall partnership results (i.e. excluding 25% performance fees) in order to purely reflect walter schloss performance....

 

my understanding is that schloss paid out the bulk of the annual gains to his partners each year, so in reality, the absolute value of funds invested would not be what is represented in the graphs, however for investors that reinvested 100% of their gains each year, i believe that the comparisons would still be valid....

 

i split the 29 year period (1956-1984) graph into three decades,... both the magnitude of outperformance and the stability of performance is remarkable, if this information was not coming from buffett there would be doubts about the quality of the data (at least in my mind)......

 

the performance during the last decade (1974-1984) is utterly amazing, walter schloss completely "destroyed" the s&p performance of 13% by generating a 35% annualized return during this decade.......

 

i am trying to complete these graphs with 1985-2001 performance figures, despite numerous attempts, i have not been able to obtain annual performance information for this period, if anybody has any information that could help, please share!

 

regards

rijk

 

Very cool, thanks for posting this.  By the way, I have tried looking for anything and everything I can find on Schloss for years and have never seen 1985-2001 performance figures.  Would love to see them as well.

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Very cool, thanks for posting this.  By the way, I have tried looking for anything and everything I can find on Schloss for years and have never seen 1985-2001 performance figures.  Would love to see them as well.

I think you can get the performance figures from the section about Walter and Edwin Schloss's partnership in Prof. Bruce Greenwald's book. I happened to lend it to my co-workers.

 

Anyway, I happened to have an old 1989 copy of Outstanding investor Digest, which has an interview with Walter Schloss and Edwin Schloss.  There is a performance figure table up to 1988. I noticed the 1984 figures are different than yours.  I assume the numbers that Buffett published for year 1984 is not the full year figure.  Below are the figures for years 1984-1988.

Year  Annual return

1984  +8.4%

1985  +25.0%

1986  +15.9%

1987  +26.9%

1988  +39.4%
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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.

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the performance during the last decade (1974-1984) is utterly amazing, walter schloss completely "destroyed" the s&p performance of 13% by generating a 35% annualized return during this decade.......

 

 

Good work rijk!

 

One thing to note is that during the 6/30/1973 - 7/31/1983 period small caps returned 27.9% annually vs 9.5% for large caps. I think Schloss invests primarily in small caps so some of the outperformance is due to this tailwind.

 

Data http://www.northlakecapital.com/clients/aa0140.pdf

 

Vinod

 

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Thanks for posting rijk. I bet his performance from 1985-2001 wasn't that stellar. Perhaps I'm wrong, though. Anyone know how Irving Kahn has performed? He's still alive so I'm interested to see how he has done in the "lost decade".

 

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

 

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I wonder if anyone can help me with a Walter Schloss quote.  Somewhere in the distant past I read an article about Mr. Schloss.  In discussing his partnership, the article said that most of the people who invested with him were Jews who had fled from Europe and for most it was all the money they had and he considered managing their money a "sacred trust".  It was such a powerful statement and sentiment that I've never forgotten it, but I cannot for the life of me find where I read it or any other place I've seen it written.  Even if we can't find it, does anyone else remember reading anything like that?

 

Thanks for any help,

Mike

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I wonder if anyone can help me with a Walter Schloss quote.  Somewhere in the distant past I read an article about Mr. Schloss.  In discussing his partnership, the article said that most of the people who invested with him were Jews who had fled from Europe and for most it was all the money they had and he considered managing their money a "sacred trust".  It was such a powerful statement and sentiment that I've never forgotten it, but I cannot for the life of me find where I read it or any other place I've seen it written.  Even if we can't find it, does anyone else remember reading anything like that?

 

Thanks for any help,

Mike

 

I don't recall that exact quote.  Buffett wrote about Schloss saying something to the effect that his clients were straight from a roll call at Ellis Island.  I know in the Greenwald book it says that the Schlosses have 2nd and 3rd generation clients who aren't wealthy and have significant amounts of their money invested with them.  Perhaps this is what you are thinking about?

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Thanks for posting rijk. I bet his performance from 1985-2001 wasn't that stellar. Perhaps I'm wrong, though. Anyone know how Irving Kahn has performed? He's still alive so I'm interested to see how he has done in the "lost decade".

 

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.

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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.

 

Graham approach keeps working, it has never stopped doing so:

 

http://www.ndir.com/SI/articles/1111.shtml

 

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Graham approach keeps working, it has never stopped doing so:

http://www.ndir.com/SI/articles/1111.shtml

 

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.

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Graham approach keeps working, it has never stopped doing so:

http://www.ndir.com/SI/articles/1111.shtml

 

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.

 

Oh, it got worse than that.  IIRC, the method picked out only 2 stocks in 2003.  But, the - um - author frequently points out that the method does not result in a diversified portfolio.  He fully expects people to hold more stocks.  ;D

 

However, there were more than 40 stocks that passed the test in the spring of 2009.  So, some patience and a holding period of a few years instead of one would result in a more diversified portfolio.  Many value strategies work well with 3-5+ year holding periods.

 

But Graham's original defensive criteria were a little too strict, produced even fewer stocks, and IIRC had an uneven record in the U.S. soon after they were suggested.     

 

IIRC, a slightly different take on Graham's defensive method was applied with good results in the South African market.  Again, it did suffer from a paucity of picks from time to time.  I don't have the paper that described it close at hand. 

 

To the last question, yes, I've been using methods similar to Graham for many years now.  I tend to be a little more quant than qual (at least compared to most posters here).  But it has served me well.

 

While we're on the topic of Walter, here's a recent article ... How to beat the market, with patience and ugly stocks.  Apologies for the self promotion.

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