Walter Schloss outperformed the S&P 500 by 600 bps annually over a 47-year career.
600 bps. Per year. Over forty-seven years. The quick math shows that Walter Schloss’s investors made 15 times the S&P 500 over that time period.
Walter Schloss is an outlier among outliers, and yet you’ve probably never heard of him. I know I didn’t hear about him until I entered the money management business and discovered value investing. In my attempt to absorb all I could about real-world investing, while purging my mind of the academic EMH mumbo jumbo, I quickly discovered why I had never heard of Walter Schloss:
He blows the EMH out of the water. The finance academics, for all their great work, need to take time away from their mathematical proofs and spend more time studying the real world.
While I never had the privilege of meeting Walter Schloss, he is my favorite investor. Why? Because he made it look so easy:
- He didn’t care about earnings.
- He rarely spoke to management teams.
- He rarely spoke to sell side analysts.
- He didn’t watch the stock market during the day.
- He never owned a computer.
- He didn’t even go to college!
He took the Pareto principle (the 80/20 rule) to the extreme and focused on only the things that matter. So how the hell did Walter Schloss absolutely dominate the S&P 500 for 47 years? Let’s dig in and find out …
“Do you have your airline and hotel reservations set up?” my new boss asked.
