Walter Schloss

Walter Schloss produced outstanding investment results for nearly half a century from a setting that could hardly have been further from the glamour of Wall Street. He never visited companies, never met management, never used a computer. Armed only with balance sheets and stock prices, he selected his holdings — a method whose very austerity carries a paradoxically powerful lesson for today's information-saturated investors.

Born in August 1916 in New York, Schloss was denied a college education by the Great Depression. At 18 he found work as a runner — a document courier — at a Wall Street brokerage. There, a stroke of fortune changed his trajectory: in the late 1930s he attended an investment course that Benjamin Graham taught at the New York Institute of Finance. The asset-based investing philosophy Graham set out in Security Analysis gave Schloss, who lacked formal higher education, a rigorous intellectual framework for confronting the market. Deeply impressed, he served in World War II, then joined Graham's firm, Graham-Newman, after the war. There he sat alongside the young Warren Buffett.

When Graham-Newman dissolved in 1955, Schloss set up his own investment partnership. The operation was austere in the extreme. He and his son Edwin occupied a small Manhattan office; there was no secretary, no analyst-report subscription. His research materials consisted chiefly of Value Line data sheets and SEC filings. He faithfully adhered to Graham's orthodox method: patiently accumulating stocks trading below book value.

The results were remarkable. From 1955 to 2002 — roughly 47 years — his partnership delivered an annualized return of about 16% after fees, handily beating the S&P 500's approximately 11% over the same period. What makes the performance especially striking is that he achieved it through extreme diversification: his portfolio typically held about 100 names, and he never allowed a single position to grow large enough to threaten the whole. This was the polar opposite of Buffett's concentrated approach. Schloss deliberately maintained a structure in which no single misjudgment could cause portfolio-wide damage.

Schloss's name reached a wider audience through Buffett's 1984 lecture at Columbia University, 'The Superinvestors of Graham-and-Doddsville.' Buffett presented him as exhibit A against the efficient-market hypothesis: a man with no degree, no connections, no computer who had quietly built wealth by following Graham's principles. The image became a symbol of equal opportunity in investing.

Schloss's philosophy can be stated in remarkably few words. First, buy at a large discount to book value. Second, check whether management owns stock. Third, wait patiently for value to surface. Fourth, fear loss. He lived by the belief that 'not losing money comes first; profits follow.' He closed his partnership in 2003 but continued to follow markets. He devoted his later years partly to philanthropy and died of leukemia in February 2012 at 95. What Schloss left behind is proof that discipline and patience alone — without complex financial engineering or algorithms — can be enough to beat the market.