Walter Schloss Quotes
104 Walter Schloss Quotes
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[On Pearl Harbour during World War II as a 23 year old] I remember it was the first Sunday of December when America was attacked. The next day, I went into the office and asked my boss whether I would still get my year-end bonus if I enlisted in the military. He said yes, and so I went straight to lower Manhattan to enlist. By Friday of that week, I had taken the oath of enlistment and was sent straight for training.
Walter Schloss
[On enlisting during World War II] I got on a big ship in New York, and we went zigzagging across the ocean so that submarines wouldn’t sink us. We passed through Rio de Janeiro, then crossed the Atlantic Ocean to the Cape of Good Hope and the Indian Ocean to Bombay. Then, as the water was too shallow in the Persian Gulf, we had to switch to a British troopship named the HMT Rohna to get to Iran. I was lucky because if I had boarded that ship a few months later, I would have been on board when it was hit and sunk.
Walter Schloss
Life is tricky, and you really need to be lucky just to survive. When I joined the military, I really thought I’d never come home. My mother was so upset when I enlisted, but serving my country was my duty. This land has provided me with freedom and opportunities, and I am grateful for that!
Walter Schloss
Obviously, Ben Graham was the teacher who showed me the way, but it was also my four years of military experience that shaped me into who I am. I learned that if I can simply survive in the market, just like surviving in the war, and not lose money, eventually I will make something.
Walter Schloss
I also learned that life is short, so you need to be confident in yourself, and stick with what you like to do rather than do something you don’t like but that will make you money!
Walter Schloss
[On receiving some GEICO shares but later selling them to pay for the births of his son Edwin and daughter Stephanie] I didn’t benefit financially from the GEICO deal, but I ended up with a son and a daughter. Not a bad deal!
Walter Schloss
Ben Graham was an original thinker as well as a clear thinker. He had high ethical standards and was modest and unassuming. He was one of a kind… He tried to keep things simple. He wrote that he didn’t believe security analysts should use more than arithmetic and possibly a little algebra for any investment decision. In re-reading the preface to the first edition of Security Analysis, I am impressed all over again with Ben’s views: ‘[We] are concerned chiefly with concepts, methods, standards, principles, and above all with logical reasoning. We have stressed theory not for itself alone but for its value in practice. We have tried to avoid prescribing standards which are too stringent to follow or technical methods which are more trouble than they are worth.’
Walter Schloss
Ben [Graham] had been hurt by the Depression, so he wanted to invest in things that would protect him on the downside. The best way to do this was to lay out rules which, if followed, would reduce his chance of loss… The ability to think clearly in the investment field without the emotions that are attached to it is not an easy undertaking. Fear and greed tend to affect one’s judgment. Because Ben was not really very aggressive about making money, he was less affected by these emotions than were many others. Of all the things that Ben accomplished in his lifetime, ‘Security Analysis’ was, to me, his greatest achievement… It was a privilege to know him.
Walter Schloss
I used the same investment approach I used at Graham-Newman – finding net-net stocks. It was all about capital preservation because I had to serve in the best interests of my investors. Many of them were not wealthy, and they needed me to generate returns that would allow them to cover their living expenses.
Walter Schloss
Because I don’t like stress and prefer to avoid it, I never focus too much on market news and economic data. They always worry investors! Besides, I am not good at market timing, so when people ask me what I think the market is doing, their guess is as good as mine.
Walter Schloss
[When he established his own fund on setting the rule that he would never disclose its investment holdings] I did that for several reasons. First, I found that investors like to focus on losing stocks, and I’d become really stressed if they came crying and asking me about what had happened. Second, I found that if people knew what I was buying, then I’d get more competition.
Walter Schloss
[Whilst working at Graham-Newman on a cheap stock called Lukens Steel that he had found that Graham-Newman had bought and were expecting to buy more] One day Ben Graham had lunch with a man who kept asking him what he liked. Not wanting to be rude, Ben said he liked Lukens Steel. I don’t know whether that man bought a great amount, but the stock went above our buying range shortly afterward.
Walter Schloss
If a stock is cheap, I start buying. I never put a stop loss on my holdings because if I like a stock in the first place, I like it more if it goes down. Somehow I find it difficult to buy a stock that has gone up.
Walter Schloss
My average holding period was about four to five years, and so there was plenty of time for cheap stocks to get back to their true worth. Besides, they would be treated as long-term capital gains for tax purposes.
Walter Schloss
I felt that I was a grocery store owner, holding stocks as my inventory. Sometimes these stocks paid dividends, and so they were worth the wait. Eventually, someone would come along and offer a good price for my inventory, and I would sell.
Walter Schloss
When a stock trades below its working capital, the investor begins to get protection.
Walter Schloss
I always like to find companies with no to low debt because debt complicates things. I also like to see whether management owns enough of the company’s stock to serve in its best interests. But you often have to keep track of management’s actions, digging into the footnotes of financial statements to see if they are honest people.
Walter Schloss
When I buy a stock, I never visit or talk to management because I think that a company’s financial figures are good enough to tell the story. Besides, management always says something good about the company, which may affect my judgment. I know a lot of good investors who like to talk to management and visit companies, but that’s not me. I don’t like that kind of stress, and if I had had to run around visiting so many companies, I would have been dead after a few years!
Walter Schloss
Since I focus so much on the downside risk, the problem is that I don’t emphasize the growth potential of a company and its profit too much. When it reaches a reasonable price, I sell.
Walter Schloss
[On purchasing a cement company called Southdown] I bought a lot of it at $12 or something similar. After two or three years, when it reached about $28, I sold it because it had reached my calculated value, and I didn’t focus too much on its growth opportunities. It reached $70 a while later. I could only be humble and move on to find the next cheap stock.
Walter Schloss
Sometimes in life you cannot regret things that didn’t work out or things that could have worked out better. The challenge in life is knowing what’s next. Like my father taught me, ‘Nothing terrible happening to you is profit!’ After all, my goal was to keep losses down, and if I could catch a few stocks going up, compound returns would work their magic.
Walter Schloss
[On net-net stocks becoming almost impossible to find] We changed our strategy a little, but remained true to Graham’s principle of downside protection. We looked for stocks that were selling below their book value. What we tried to do was to buy assets at a discount instead of buying earnings. Earnings can change quickly, but assets don’t, and so the new strategy worked well for a while.
Walter Schloss
[On deciding to close down the business in 2001 after more than 45 years of managing money] I had turned 85, and one day my son said to me, ‘Dad, I can’t find cheap stocks anymore!’ So I said, ‘Let’s go out of business!’ We liquidated the partnership and gave back the money to investors.
Walter Schloss
Finding cheap stocks became too stressful, and so it was time to stop looking.
Walter Schloss
When it comes to investing, my suggestion is to first understand your strengths and weaknesses, and then devise a simple strategy so that you can sleep at night!
Walter Schloss
Remember that a share of stock represents a part of a business, and so you need to understand its financials before making a judgment. When you have made a sound decision, make sure you have the courage to stay true to your convictions and not let the market affect your emotions. After all, investing should be fun and challenging, not stressful and worrying.
Walter Schloss
I always held 50 to 100 stocks at any given time because it would have been very stressful if one particular stock had turned against me. Psychologically, I am just built differently than Warren [Buffett]. I see that there are many people trying to be like Warren, but they should take note that he is not only a good analyst; he is also a good judge of people and businesses. I know my limitations, so I’d rather invest in the way I am most comfortable with.
Walter Schloss
I think investing is an art, and we tried to be as logical and unemotional as possible. Because we understood that investors are usually affected by the market, we could take advantage of the market by being rational. As [Benjamin] Graham said, ‘The market is there to serve you, not to guide you!’
Walter Schloss
Many investors today focus on earnings, but I focus on assets and don’t try to predict next months’ earnings, which is a much more difficult approach to investing.
Walter Schloss
[On factors needed to make money in the stock market] Price is the most important factor to use in relation to value.
Walter Schloss
Try to establish the value of the company. Remember that a share of stock represents a part of a business and is not just a piece of paper.
Walter Schloss
Use book value as a starting point to try and establish the value of the enterprise. Be sure that debt does not equal 100% of the equity. (Capital and surplus for the common stock.)
Walter Schloss
Don’t buy on tips or for a quick move. Let the professionals do that, if they can.
Walter Schloss
Don’t sell on bad news.
Walter Schloss
Don’t be afraid to be a loner but be sure that you are correct in your judgment. You can’t be 100% certain but try to look for weaknesses in your thinking. Buy on a scale and sell on a scale up.
Walter Schloss
Have a philosophy of investment and try to follow it.
Walter Schloss
Don’t be in too much of a hurry to sell. If the stock reaches a price that you think is a fair one, then you can sell but often because a stock goes up say 50%, people say sell it and button up your profit. Before selling try to re-evaluate the company again and see where the stock sells in relation to its book value. Be aware of the level of the stock market. Are yields low and P-E ratios high. Is the stock market historically high? Are people very optimistic etc?
Walter Schloss
When buying a stock, I find it helpful to buy near the low of the past few years. A stock may go as high as 125 and then decline to 60 and you think it is attractive. 3 years before the stock sold at 20 which shows that there is some vulnerability in it.
Walter Schloss
Try to buy assets at a discount than to buy earnings. Earnings can change dramatically in a short time. Usually assets change slowly. One has to know much more about a company if one buys earnings.
Walter Schloss
Listen to suggestion from people you respect. This doesn’t mean you have to accept them. Remember it’s your money and generally it is harder to keep money than to make it. Once you lose a lot of money it is hard to make it back.
Walter Schloss
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