Walter Schloss: The Ordinary Man Who Beat Wall Street

Two Minutes Reading with the Masters of Investing 🕰️

• No college degree. Learned investing in night school from Benjamin Graham.
• Started his own partnership in 1956 with just $100,000.
• Ran it for 47 years—quietly compounding wealth far above the market.

• Core belief: Buying a stock means buying part of a business.
• His mindset: “Pay 40 cents for a dollar’s worth of value.”
• Deep in the annual reports: not just screening numbers—he recalculated assets himself to strip out “water” and arrive at his own true book values.
• Evolution of strategy: Early: Buy companies at ⅔ of net current asset value (classic Graham net-nets). Post-1960: Such bargains disappeared, so he turned to companies trading below tangible book value. Later: Bought stocks at ½ of book value, or if rare, at ⅔ of book value. In the end: Would buy even at book value, but almost never higher—unless the company had a true moat.
• Diversified heavily—holding 100+ stocks at a time.
• No rumors, no forecasts, just patient digging in balance sheets.

• 47 years of 20.1% annual returns.
• $10,000 → about $55 million.
• Buffett called his method “cigar butt investing”: You find a discarded, soggy cigarette on the ground. It’s free, ugly, but still has one last puff of value. That puff is pure profit.
• His fund stayed small (~$100–200 million) because “cigar butts” can’t absorb giant capital, so he returned cash to investors regularly.
• And remember: Buffett himself started on this very path—picking cigar butts before evolving to buy wonderful businesses at fair prices.

• Schloss’s standards changed with the times, but one thing never changed: he only bought companies cheaper than their assets.
• Even in the worst case—if the company went bankrupt—he asked: “How much value is left after liquidation?”
• He proved: You don’t need Wall Street connections. You don’t need an MBA. You need patience, discipline, and the courage to trust numbers over noise.