About this blog

The name of this blog is a copy from a title of a 1973 Forbes article about Walter Schloss. I try to follow a similar approach to investing as Walter Schloss and I liked the article name so I thought the name was appropriate.

Walter Schloss was one of the greatest investors who ever lived, sadly he died in 2012. He worked for Benjamin Graham, the father of value investing and co-author of its bible Security Analysis, and then he went on to form it's own investment partnership. He started it in 1955 in a spare room at Tweedy Browne and set one of the most amazing investment track records in history. Walter Schloss managed money for 46 years and achieved annual returns of 21% for it's partnership and 16% for it's limited partners while the benchmark averaged 10% per annum. Surprisingly he did this using only Value Line research, financial reports and proxy statements, he didn't have a computer and he checked prices in the morning newspaper. When asked about his investment philosophy he usually said "We buy cheap stocks". In the beginning of his partnership he just bought net-nets and when these type of opportunity became rare he changed his approach and looked for companies trading at a discount to book value. He really liked when companies didn't have any debt, he usually said "if doesn't have debt its worth something".

I like Walter Schloss investment approach mainly for it's simplicity, he just tried to buy cheap stocks and when establishing the value of a company he thought the book value was a good place to start. This may be simple but sure it's not easy, at all. Normally only mediocre companies in unfavourable industries or companies facing problems end up trading at a discount to book and having your portfolio full of these kind stocks it may harder then it looks. However, this exactly why this approach works because you end up with companies that other investors don't want, and if no one wants it they are probably bargains. Investing with this framework increases your probability of buying at the point of maximum pessimism, to use the words of another famous investor (Sir John Templeton).

I intend to use this blog to write about my investment ideas, learn and improve my skills as an investor. I believe that writing investment thesis clarifies my thoughts on a particular idea and will help me to separate luck from skill. When an investment is sold at a gain or a loss I will be able to go back and analyse my reasons to buy a particular stock against the outcome. I am  also looking forward to discuss investment ideas with like minded investors, so if you want to discuss a particular stock or just talk about investment philosophy/process go ahead and contact me at makingmoneyoutofjunk@gmail.com.

All the best,